Legacy Funds

Liquid – Transparent – Alt Investment Strategies

Going back in time…

Here is a daily chart of the Dow from 1920 to 1940 to get a historical feel of what happened 80 yrs ago.

djia19201940s

It is hard to get the true feel for the size of the rallies and the declines, so referring back to the chart from previous post http://seekingalpha.com/instablog/405677-suzanne-h/30970-does-a-huge-rally-always-mean-the-bear-market-is-over will provide the percentage moves and dates.

Advertisements

October 15, 2009 Posted by | Legacy Funds | , | Leave a comment

Does a huge rally always mean the bear market is over?

Almost everyone is aware that the stock market crashed in the 1930’s during the Great Depression. What most people may not be aware of is that it didn’t crash straight down but rather had multiple strong rallies followed by several declines.

There are many reasons that our current rally is still only a bear market rally, but in the interest of time will just show a table from the decline back in 1929-1932. True the market lost 89%, but it was not in one big decline as many possibly envision. There were big rallies before moving on to lower lows:

29 to 32 chart

Courtesy sovereignsociety.com

However, looking at the rallies and declines in the above chart should get one to at least consider we may have some unfinished business on the downside ahead of us. Time to be careful, we are very close to the end of this rally, most likely 1100 to 1120 as maximum upside — though not a guarantee and we have to manage risk and play the hand the market deals.

October 9, 2009 Posted by | Legacy Funds | , , | 2 Comments