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03/20/2009

1973-74 vs. Today

With the recent bounce off the lows in the stock market, I thought I’d look at the numbers during the 1973-74 bear market to point out how one can miss some huge gains off the bottom…not that anyone can call that exactly.

Following are the monthly closing highs and lows for the Dow Jones, 73-74.
 
1973
 
Jan 1051…992 [1051…1/11/73]
Feb  996…947
Mar  979…922
Apr  967…921
May  956…886
Jun  927…869
Jul  936…870
Aug  912…851
Sep  953…880
Oct  987…948
Nov  948…817
Dec  851…788
 
1974
 
Jan  880…823
Feb  863…803
Mar  891…846
Apr  869…827
May  865…795
Jun  859…802
Jul  806…757
Aug  797…656
Sep  677…607
Oct  673…584
Nov  674…608
Dec  616…577 [577…12/6/74…bear market -45%] 

But, by May 1975, the Dow Jones was back to 858 (5/14/75…a 49% bounce off lows), and 878 (6/30/75…52%). 

By January 1976, the Dow was at 975 (1/30) and two months after that 1009 (3/24…or up 75% off bear market low in about 15 months). 

Now take a look at our current market cycle. 

October 2007, the Dow Jones peaks at 14164 (10/9). But it wasn’t straight down from there. As of 12/10/07, the Dow was still at 13727. 

Then the Dow closed at 11740 on 3/10/08, or 17% off the all-time high. But two months later it was back to 13028 (5/19/08). ‘Whoopty-damn-do,’ as former NBA star Derrick Coleman would have said had he been asked at the time to analyze the market’s movements. 

Then, two months after this, the Dow had fallen to 10962 (7/15/08) or 23% off the high, officially a bear market. 

A month later, the Dow was back to 11782 (8/11/08). Then September hit.
 
9/12/08…11421
9/19/08…11388
9/26/08…11143 

What crisis?! Well, of course the intraday activity, as we dealt with the likes of Lehman Brothers, AIG, and Merrill Lynch, was stupendous, but you could have easily been faked out that the Dow Jones had stabilized. 

Wrong.
 
Two weeks later the Dow was at 8451 (10/10/08). 

Three days after this, though, the Dow was 9387 (10/13/08). And later, 9625 (11/4/08). 

But then a sickening slide to 7552 (11/20/08)…and a last rally back to 9034 (1/2/09), before yet another crash to 6547 (3/9/09). 

The current rally off the lows? That’s tomorrow’s history. 

[Sources: Yahoo Finance; “The Dow Jones Averages, 1885-1995,” edited by Phyllis S. Pierce] 

We’ll return next week.
 
Brian Trumbore
 



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Wall Street History

03/20/2009

1973-74 vs. Today

With the recent bounce off the lows in the stock market, I thought I’d look at the numbers during the 1973-74 bear market to point out how one can miss some huge gains off the bottom…not that anyone can call that exactly.

Following are the monthly closing highs and lows for the Dow Jones, 73-74.
 
1973
 
Jan 1051…992 [1051…1/11/73]
Feb  996…947
Mar  979…922
Apr  967…921
May  956…886
Jun  927…869
Jul  936…870
Aug  912…851
Sep  953…880
Oct  987…948
Nov  948…817
Dec  851…788
 
1974
 
Jan  880…823
Feb  863…803
Mar  891…846
Apr  869…827
May  865…795
Jun  859…802
Jul  806…757
Aug  797…656
Sep  677…607
Oct  673…584
Nov  674…608
Dec  616…577 [577…12/6/74…bear market -45%] 

But, by May 1975, the Dow Jones was back to 858 (5/14/75…a 49% bounce off lows), and 878 (6/30/75…52%). 

By January 1976, the Dow was at 975 (1/30) and two months after that 1009 (3/24…or up 75% off bear market low in about 15 months). 

Now take a look at our current market cycle. 

October 2007, the Dow Jones peaks at 14164 (10/9). But it wasn’t straight down from there. As of 12/10/07, the Dow was still at 13727. 

Then the Dow closed at 11740 on 3/10/08, or 17% off the all-time high. But two months later it was back to 13028 (5/19/08). ‘Whoopty-damn-do,’ as former NBA star Derrick Coleman would have said had he been asked at the time to analyze the market’s movements. 

Then, two months after this, the Dow had fallen to 10962 (7/15/08) or 23% off the high, officially a bear market. 

A month later, the Dow was back to 11782 (8/11/08). Then September hit.
 
9/12/08…11421
9/19/08…11388
9/26/08…11143 

What crisis?! Well, of course the intraday activity, as we dealt with the likes of Lehman Brothers, AIG, and Merrill Lynch, was stupendous, but you could have easily been faked out that the Dow Jones had stabilized. 

Wrong.
 
Two weeks later the Dow was at 8451 (10/10/08). 

Three days after this, though, the Dow was 9387 (10/13/08). And later, 9625 (11/4/08). 

But then a sickening slide to 7552 (11/20/08)…and a last rally back to 9034 (1/2/09), before yet another crash to 6547 (3/9/09). 

The current rally off the lows? That’s tomorrow’s history. 

[Sources: Yahoo Finance; “The Dow Jones Averages, 1885-1995,” edited by Phyllis S. Pierce] 

We’ll return next week.
 
Brian Trumbore