The Dow, 2008 vs. 1987 vs. 1929 (as of 24 July 2009)
Posted Oct29-08 at 05:10 PM by Redbelly98
Updated Oct27-09 at 09:03 PM by Redbelly98 (Update graphs)
Updated Oct27-09 at 09:03 PM by Redbelly98 (Update graphs)
A comparison of the Dow Jones Industrial Average during the financial crashes of 1929, 1987, and 2008.
Looking at the 3 months before & after each of the three crashes:
An 18 month time frame:
And finally, here is a five-year graph:
The Dow took quite a different track in the years following 1987 (green curve) than it did following 1929 (red curve). However, it was not until late May following either of these crashes that there was any noticeable trend toward either recovery (1988) or further decline (1930).
The lowest close of The Dow during the Great Depression was on 8 July 1932, when it closed at 41.22. This would be the equivalent of about 1330 points today.
I will update these graphs from time to time.
Looking at the 3 months before & after each of the three crashes:
An 18 month time frame:
And finally, here is a five-year graph:
The Dow took quite a different track in the years following 1987 (green curve) than it did following 1929 (red curve). However, it was not until late May following either of these crashes that there was any noticeable trend toward either recovery (1988) or further decline (1930).
The lowest close of The Dow during the Great Depression was on 8 July 1932, when it closed at 41.22. This would be the equivalent of about 1330 points today.
I will update these graphs from time to time.
Total Comments 20
Comments
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28 Oct. 2008 ↔ 15 Nov. 1929
As of this point during the 1929 crash, the markets were just entering a period of stability followed by growth. This would last through April of 1930, after which the market would again start falling.Posted Oct29-08 at 05:17 PM by Redbelly98 
Updated Nov21-08 at 06:41 PM by Redbelly98 -
21 Nov. 2008 ↔ 30 Nov. 1987 ↔ 9 Dec. 1929
As of 21 Nov. 2008 -- and the corresponding dates in 1987 and 1929 -- the level of the Dow is comparable for the 3 crashes:
11/21/2008: 8,046
11/30/1987: 7,980 (2008 equivalent) -- actual value 1834
12/ 9 /1929: 8,340 (2008 equivalent) -- actual value 259
The difference in values (about 400 points) can be easily gained or lost in just 1 or 2 days of trading.Posted Nov21-08 at 06:40 PM by Redbelly98
Updated Jun6-09 at 09:48 AM by Redbelly98 (minor punctuation change) -
30 Jan. 2009 - updated graphs.
The curves for the three crashes are all still relatively close to each other.Posted Jan17-09 at 10:31 PM by Redbelly98
Updated Jan31-09 at 06:00 PM by Redbelly98 -
Interesting statistics. I wonder now how these three years compare for the dow leading up to the decline.
Also, I wonder if all this is ultimately caused by the greed of large institutions that trade on wall st, and not on any actual economic factors. For instance, the cost of gasoline rose to $4 per gallon last year, primarily on speculation as I understand it. In other words, gas prices didn't rise because of supply and demand at the individual level, but because of supply and demand by institutions that bought and sold the comodity on speculation. The cost of gas didn’t rise because of a decline in supply or a sudden rise in demand of gasoline. There was insufficient change in supply and demand to cause the sudden rise in the cost of oil. Cost rose primarily because of the actions of greedy financial institutions.
Now compare that to the present economic recession. Is the Dow dropping because of a widespread change in supply and demand? Personally, I think it’s all hype. Unfortunately, it’s hype that causes real change to the fortunes of individuals and not just the fortunes of greedy financial institutions.Posted Mar7-09 at 11:35 AM by Q_Goest
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Ack, I just noticed your comment and it's been over a month since you posted
. You'd think I'd have been notified or something 
I don't pretend to understand everything about the stock market, but it's odd how similar things were right around where the crashes occurred. The coming months are where things started differing significantly in 1988 vs. 1930.Posted Apr16-09 at 11:29 PM by Redbelly98
Updated May10-09 at 08:42 AM by Redbelly98 (fixed typo) -
Updated Dow Jones graphs.
As of 8 May 2009 the 3 curves are at nearly equal levels, within 2% of one another:
08 May 2009: 8575
17 May 1988: 8640 (2009 equivalent) -- actual value 1986
26 May 1930: 8760 (2009 equivalent) -- actual value 272Posted May10-09 at 08:59 AM by Redbelly98
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This blog just went over 10,000 views.
Posted May14-09 at 09:35 PM by Redbelly98
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Very interesting. It looks like that the market is enter into a break point, if history can be references.
Posted May25-09 at 12:30 PM by Peter_Pan6688
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Graphs have been updated to 5 June 2009.
> "It looks like that the market is enter into a break point, if history can be references."
Indeed. For now we are closer to the green curve than the red, which is good if the market holds onto its recent gains.
Upcoming in September there is even more divergence between the two previous market crashes, as the red curve (1930) resumes its drop.Posted Jun6-09 at 09:36 AM by Redbelly98
Updated Jun6-09 at 10:07 AM by Redbelly98 -
From the chart, the curve of DOW now is above the 1987 one, so far it looks good.Quote:Originally Posted by Redbelly98
Graphs have been updated to 24 Aug. 2009.Posted Aug27-09 at 11:21 AM by Peter_Pan6688
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Red,
I would be very interested to see the 5yr graph with the bail-out removed. It has been theorized that the TARP only delayed the natural correction but that the simple delay was all that was necessary to avoid a complete melt down. The free market correction still must occur. So if you were to remove the Dow data for NOV 20, 2008 to FEB 18, 2009 (a basically flat period at 7500) and compressed the 2008/2009 graph I think you will find a scary similarity to 1929/1930.
There is one huge piece of data to also consider when trying to speculate which line we will trend closer too - UNEMPLOYMENT.
In 1987, unemployment was on the mend from a disturbing high of 10.8% in DEC of 1983. The highest rate of unemployment that was seen during the years 1987 - 1992 was 7.8% in JUN of 1992.
We have already hit 9.7% with early predictions to see 13%. Here is a graph of the recession unemployment.
So, with an unemployment curve, at best like the 1981 recession and all of the other world wide economic complications, I have trouble seeing a 1987 recovery.
BTW, you have done a great job with this. :)Posted Sep15-09 at 02:22 PM by PatriaCo
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What was the unemployment number and pattern in 1929?
Posted Sep16-09 at 07:52 AM by Peter_Pan6688
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Now, just today we have a nicely hidden headline that nobody seems to be covering.
http://www.cnbc.com/id/32872677
"Recession Could Cost 25 Million Jobs"
That will be a rate of over 15%. Ironically, this rate of unemployment was not seen (and only last seen) until the end of 1931. Thus, 2008 unemployment is like 1929, 2009 equates to 1930 and 2010 seems destine for 1931.Posted Sep16-09 at 11:11 AM by PatriaCo
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Just find a chart that is interesting:
Posted Sep17-09 at 10:11 AM by Peter_Pan6688
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There is a real time updated chart for 1929-1940 vs. 2007-today:Quote:Originally Posted by Redbelly98
Graphs have been updated to 24 Aug. 2009.
Here is the link:
http://www.dickreuter.com/res1.php
The chart below shows a comparison of the Dow Jones Industrial average percentage change for the periods of September 1929 - 1940 (blue) versus September 2007 - today (red), rebased on the respective peak days. It updates automatically on a daily basis.
Posted Sep17-09 at 10:29 AM by Peter_Pan6688
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One thing more interesting is Dow vs. Nikkei:
or SP500 vs. Nikkei:
Posted Sep17-09 at 10:42 AM by Peter_Pan6688
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Graphs updated as of 10/27/09.
Sorry for not responding sooner.Quote:Originally Posted by PatriaCoI would be very interested to see the 5yr graph with the bail-out removed. It has been theorized that the TARP only delayed the natural correction but that the simple delay was all that was necessary to avoid a complete melt down. The free market correction still must occur. So if you were to remove the Dow data for NOV 20, 2008 to FEB 18, 2009 (a basically flat period at 7500) and compressed the 2008/2009 graph I think you will find a scary similarity to 1929/1930.
You make an interesting point. In fact, we can look at the 18-month graph "as is" and see a 3-4 month delay in features between 1929 & 2008: the sharp dip in mid-November, 1929, and the shallower drop that occurred in late April / early May, 1930, are both reproduced later on in the 2008 curve.
For now, we do appear in good shape, as we have not duplicated the drop in June 1930. Let's hope that the current upward trend continues.
The unemployment figures are another interesting comparison. If the rate currently "peaks" at around 10%, as seems to be happening, that will be another good sign relative to the years following 1929, when it zoomed up to 25% in 1933.Posted Oct28-09 at 09:06 AM by Redbelly98
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I have created an over-lapping graph of the DJIA and Unemployment. These are 12 year periods that cover 1929 / 1987 / Current. Here is an example:
The full article is located here:
1929 vs 1987 vs CURRENT - DJIA and Unemployment
http://patriaco.com/business/article.php?id=033Posted Nov1-09 at 11:20 PM by PatriaCo
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Cool. By the way, if you can invert the scale for unemployment, the correlation and slight time lag may appear more obvious.
Posted Nov5-09 at 08:18 PM by Redbelly98
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Great idea but for now here is the Current Rolling 12 year that is updated monthly.
Posted Nov6-09 at 05:12 PM by PatriaCo
