In case you have not heard, there is a stock market crash happening as we speak. Today, Friday October 10 2008 is going to be known as Black Friday, or something. I’m not sure if it is possible to put this into perspective in any sensible way, but I have two graphs to show you.
The first is a graph that puports to show cycles in the Dow Jones average after all kinds of adjustments are done. The main effects of these adjustment are to normalize secular (short term) variation by using a log scale, and the imposition of relative value lines, essentially adjusting for inflation. I’ve drawn the current crash to show that it is not as bad (to date) as the 1929 crash by about an order of magnitude (not that orders of magnitude have that much meaning…)
The second graph shows the Dow Jones since 1970. I think the point here is to define two things: What may be a new pattern (but it has only happened twice) of mega-bubbles and where the current bottom is in relation to the value of stocks not that long ago.
Of course, we don’t know what the bottom is, but you can print this graph out and carry it around with you and check every few hours over the next week..
Perhaps a weekend off from trading will settle things down a bit. But, if you had retirement plans for any time over the next two years, AND you voted for George Bush and the Republicans last election, well, you fucked yourself, didn’t you?