Stock market following 1929-1932 game plan?
So, as the market continues to go lower, comparisons to the 1929 crash and subsequent bear market of the Great Depression seem to grow ever louder, accompanied by the usual dire predictions of a repeat occurrence. Fortunately, well-reasoned counter-arguments such as the one recently at Running of the Bulls help keep things in perspective (see The Market is Going to Zero (and All That)).
The whole idea of making predictions based on such comparisons is silly for several reasons. Not because such a market loss or economic collapse could never happen again – it clearly could – but because there are too many differences between now and then to draw any real conclusions (much less make predictions). (Incidentally, a better comparison to the current crisis might be the Panic of 1873.)
Also, the very fact of the Great Depression being forefront in the minds of so many people almost guarantees that the economy and markets will fail to accommodate the scripted historical 1929-1932 game plan. That doesn’t mean things can’t be bad – but it does mean they’re virtually guaranteed to be different.
Related posts:
Online stock returns predictor based on Shiller’s P/E10
Shiller: The market hasn’t been this cheap in decades
Market’s long-term rewards potentially “staggering”
Trader mentality run amok?
