The Crash

Today in our turbulent Economic times many are searching for the bottom of the never-ending slide of the Dow Jones Industrial Average.  Some are comparing our current economic problems to the great depression, most still believe that our government has the ability to prevent a repeat of those times.  Mostly I think people mistake the 'Crash' of the stock market of 1929 as a Single event that decimated the marketplace, this notion is not only entirely untrue it's dangerous to use as a gauge in our current situation.

 

In August 1929 the Stock Market hit it's peak, it wasn't until July 1932 that the stock market found it's footing and grabbed hold.  Matter of fact the fall was slow and painful with many rallies and market corrections along the way.  The reason this is dangerous is that those same market corrections and opportunities to re-enter the market persist today as investors attempt to find the bottom. 

 

Today the market fell to less than 47% of it's highest value on October 2007 14 months earlier, this percentage of overall decrease has not been seen since December 1930 when the Dow retraced from it's hi at 47% 14 months from it's high.  The Dow continued it's decent into oblivion until the before mentioned July 1932 when it reached just 12% of it's previous value, banks and manufacturing jobs were lost, consumers retracted their spending, and the few companies left raised prices in a less competitive landscape to make a profit and stay in business.  Rampant inflation took hold and what people did spend was reduced to the absolute necessities further debilitating the economy.  All this and we didn't even have a war machine going on to hold up the economy.

 

Be wary friends we could have a long way to go.