Click to enlarge:
As you can see from the chart above, the Dow Jones Industrial Average (inflation adjusted) peaked at ~5000 in 1929 and ~7000 in 1966. Which makes last week's trading range between 8000-9000 either the most tremendous buying opportunity in the last 15 years or a terrifying look into the ravages of deflation. You will also notice that it takes on average 14 years for these massive troughs in the cycle to right themselves again. The DJIA often stays flat for around 28 years (for example see 1890-1911, 1900-26, 1926–56 and 1966-96). I figure we are about halfway through the current cycle.
I believe in human progress, and the science of economic theory and crisis management has evolved quite a bit in the last hundred years. The key question however is this: Which expertise has evolved farther, our ability to solve economic crisis, or our ability to create them?
Extra Credit / Required Reading:
- Dollar Strength on Recognition of Worldwide Crappiness
- Robinson Crusoe and the Subjectivity of Desire
- Reflections on Today, from Henry Clews, 1908.
- Art Market Rules
- The Long View... 1885-2009
- Forecast: The Battle Between Paper and Tangible Assets, A Personal View
- Tobin's Q
- Luxury Goods
- After the Gold Rush...
- The Gaussian Fallacy and other Bullshit Baby Boomer Epistomologi
- Douchebag of the Noughties
- Synopsis of the Panic of '08
- You Know its a Bubble When...
- Quantitative Easing
- Vallejo, CA