Quote:
Originally Posted by Brujah
By the end of the week of November 11 (1929), the index stood at 228, a cumulative drop of 40 percent from the September high. The markets rallied in succeeding months but it would be a false recovery that led unsuspecting investors into the worst economic crisis of modern times. The Dow Jones Industrial Average would lose 89% of its value before finally bottoming out in July 1932.
http://en.wikipedia.org/wiki/Stock_market_crash |
If we are going to bring up the Great Depression lets also quote from the same article:
Quote:
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On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2
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596% vs the 175% climb since the last slump
Yes there will be false rallies yes it will most likely stagnate and go lower, but we have to remember that during the very, VERY worst part of the depression P/Es were at about 5.5.. Some stocks are either close to this now or will be based on increased revenue that won't be included until the FY09 accounts (and we're talking growing companies that aren't going to be that affected by a recession). Using the '29 crash as a reference in some ways shows that now is the time to buy. That is simplistic, but no more so than using one crash to divine another.