CHART OF THE DAY: A LONG-TERM PERSPECTIVE
Today’s Chart of the Day comes to us courtesy of chartoftheday.com. Taking the long-term perspective, you just have to wonder if the market isn’t in the same process it was in the mid-70′s when the sideways to down churn ultimately resulted in a downside overshoot that ended in the early 80′s.
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 a little more than double where it was at its 1929 peak and trades 54% above its 1966 peak – not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 57% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today.
The question is do we just see trend growth or under trend growth (since we are in the pictorial “mean valuation”)?
Like the article, making the link with the Nifty 50 ’66 bubble peak, one could expect below trend. Then as now, the (Vietnam) deficits, the rise of OPEC, the growing suspicion of paper currencies set upon us a multi-decade calamity. Oh, my god, I sound like an Elliot Wave theorist. Here come the locusts .. bzzzzzz.
It’s crazy to look at these really long-term charts. Makes you think we’re working off a huge portion of the bubble still.
That’s why its crazy NOT to look at it.
Here’s a really good one also of the same thing. Courtesy of dshort.com
http://dshort.com/charts/SP-Composite-regression-charts.html?SP-Composite-real-regression-to-trend
This website is amazing.