Stock market crash of 1929 repeating?

Please look at the graphic below which compares a period of time leading up to the 1929 Stock Market Crash, and recent market trends over the past few years. This information is circulating the Internet as a prediction that come this January the stock market will crash. Based on these trends Economic Collapse appears to be right around the corner. I have stared at those trends over and over again just wondering. Is this for real? How could something that happened decades ago actually repeat and happen again? I don’t have all the answers but I will be honest with you about something – I had no idea there was such a run up on the stock market back in 1929, just prior to the crash. Interesting. A few observations regarding the comparison:

  • The run up in 1929 represented nearly a 100 percent gain in the market. This is far more than the current trend.
  • The time frame represented between the two trend lines are different. This is not a big deal to me – things are different now than back then. 
  • I have been saying for the last two years that we have a false market. There is no viable reason why the market should be up as high as it is. No doubt that the run up just prior to the Crash in 1929 had a few saying something similar.
  • The market, the economy, and the government is much more complicated now than back in 1929. Does this mean we are more susceptible to a crash or less? 

chart

Whether comparing these trends is just a waste of time or not doesn’t change the fact we exist in a false economy supported by a dollar that has declining value.

Keep prepping.

Rourke 

 


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4 Comments

  1. DeMark has clearly done some interesting work in the field of technical analysis, but this chart is highly manipulated. I took the same data and plotted 1/1/1928 – 8/9/1929 (two months before the crash) and matched it to the same number of periods from 7/2/2012 through 3/3/2014 – which is roughly the time period that appears on his chart and represents 418 trading days from both time periods. Without manipulating the chart at all, and just taking Excel’s defaults at face value, the pre-29 crash is very choppy and the current day prices are flatter – and looks nothing like the above chart. That being said, ultimately the correlation was 86%, which is pretty high (not as high as the 100% that chart implies, but high), except you can at random pick relatively high correlations like that. I chose similar periods from the start of 1992 and 1994, randomly, and got a correlation of 74%. I tried a few others, i.e. comparing 1982 to 1942 = 95% correlation; 1992 to 1942 = 72%; 1942 to 2002 = -.07. I wouldn’t consider my comparisons scientific, but I wouldn’t consider his scientific either. I used Bloomberg for my data source, and Excel to run the calculations.

    For the record, I think the country is in horrific financial shape and don’t see a clean path to correct it. I think the individuals in this country are financially ill-prepared for even a loss of work for a single week, much less retirement, or disaster scenario planning. Even in like-minded circles of friends, I can count on a single hand the number of people who know how to slaughter and dress a chicken for dinner or forage for wild food. If we do have a Great Depression, it will be worse this time around imo, but it won’t be because DeMark finagled some charts over a specific time period to imply they move in the same direction.

    Also, I don’t want to sound overly critical or like a know-it-all (I always get in trouble for that here), and think this type of chart is interesting to discuss and hear other people’s opinions around it. That’s just my two cents and 10 minutes worth of analysis.

  2. He also left out that prior to 1929 most stocks were purchased on margins. That is no longer the case. While a crash is always possible the factor are different that may lead to it.

  3. Thanks Rourke and those who commented. I know nothing about the stock market -the only stock we own are out in our pasture-smile – but I learn a lot from you all.Folks prep hard with almonds, fruit and veggies ,milk and beef because the drought effects will be hitting the food stores very soon. Hay and grain prices are hitting us farmers very hard and of course the middle people will get their share –
    there has been a nation wide shortage of salt for the roads and pellets for pellet stoves (pellet stoves can be a poor choice because they usually need electricity to work and the pellets are man made)).Here in NYS only those who are heating exclusively with pellets can buy two bags at a time.Are others having this problem?
    Firewood is very expensive here also. $250 per cord for seasoned wood.
    Please keep prepping and praying. Arlene and family

    .
    Here in NYS onl;y folks heating exclusively with pellets(which are a

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