Three myths about stocks in the Great Depression
With the stock market down over 50%, comparisons with how stocks performed during the Great Depression are running rampant. But how much of what we’re hearing about stocks in the 1930s is true?
Not as much as you might think, says Mark Hulbert in his column this week in Barron’s. Hulbert went back and carefully studied the stock market’s behavior during the 1930s and found several myths about the Depression that should be dispelled:
- Myth #1: It took 25 years for the stock market to recover back to its 1929 highs.
- Myth #2: If today’s market is repeating the 1930′s script then now is a terrible time to invest.
- Myth #3: The extraordinary volatility of today’s market – like that of the 1930s – is warning of a further wild ride ahead.
In his article, Hulbert examines each of these in detail and draws some interesting conclusions. The bottom line for investors – stocks didn’t fare as poorly in the Depression as many think.
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