Friday, October 24, 2008

Chart of the Day



Chart of the Day
For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is now less than double where it was in 1929 and trades a mere 29% above its 1966 peak. Not that spectacular of a performance considering the time frames involved. However, the magnitude of the bull market of 1982 to 1999 (even when adjusted for inflation) was truly of historic proportions. It is also interesting to note that the magnitude of the current bear market (when adjusted for inflation) is greater than what occurred during the dot-com bust of 1999 to 2003. As a result, the Dow currently trades at 12-year lows.

7 comments:

Wayne said...

Thanks Allen! A real eye-opener...

Anonymous said...

Ahh Allan:

We meet yet again. As usual on favourable terms.

The Chart of The Day aside, I have been shorting the US market (albeit in a different way than you are)for the last month in a big way with S&P500 Puts and selling the futures contracts short.

The US and its people and financial services sector are surely are out of the Favour of The Gods!

Fortunately, and partly thanks to you (my usual indicators were short as well but you cased me to use 3000 more option contracts than I would have otherwise) my own bank account has risen to the size of that of the ancient kings of Greek City-States.

Per your advice, I have shorted practically the entire planet, including the European and Asian exchanges.But to a much lesser degree than my US-based shorts.


Again, thank you, my friend. If you are ever in Greece, please drop by for ouzo & caviar (black and gold only, not red.)

Leonidas
Southern Greece

Allan said...

Hi Leonidas, Glad you have benefited in some way from my analysis. My managed accounts and hedge fund have done well, most all stocks were sold in mid-September and what I kept I hedged with QIA. Pretty simple stuff, but it worked. I also doubled various Q puts along the way, taking 100% and rolling lower for more leverage.

Yet there are some who despite my protestations, insisted on holding stocks and then buying because they were, "So cheap." They're 25% cheaper now. My favorite response though, was from a poster named "flop" at George Gilder's Technology Forum. Upon reading my "Crash Warning" flop posted a response that started like this: "He is full of shit..."
Would love to have seen flop eat his words.

Finally, I've heard from a lot of folks who have saved or made lost of dough through my work these past few months. I'm proud of the fact that it was good advice, but even prouder of the fact that the analysis was free.

I think I'm pretty much locked into providing my opinions without charge, since I have made such a big deal about it. So if anyone has truly made a significant windfall from by Blog, there's still a "Donate" button above my photograph to the right.

Nevertheless, these ideas and opinions shall continue rolling onto and off of these pages, as always. Sometimes I think the Internet was created with me and my ego in mind.

A

Anonymous said...

Allan:

How big of a factor does Advanced GET play into your decision making?

Many of the charts you discuss can be generated and analyed by GEt.



Curt

Anonymous said...

Allan, it's none of our business how much you are getting in donations. But if you are getting very little, please let us know because sometimes there is the bystander effect where if there are many people available to "assist" then no-one helps because they all assume/hope someone else will.

I've donated once and plan to again when able. While there is no obligation I hope anyone who has benefited from your free services expresses their gratitude via donation if they are in a position to do so.

Your blog has proven the best source of information on investing I have ever come across. Thank you.

Wayne said...

Hey Allan, tho I don't have a lot of capital I certainly have avoided the large percentage losses I might incurred if it hadn't been for your advice. So I just contributed $50 ... This was originally invested in a trial subscription to a newsletter which I've found to have totally worthless advice, so why not put that money into something that's actually helped? Keep up the good work!!!

Regards,
Wayne

Allan said...

Wayne, got the paypal notice of your contribution, very much appreciated!