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38 year NYSE chart

Started by pkamm, 10/09/2008 08:40PM
Posted 10/09/2008 08:40PM Opening Post
Here's the NYSE composite, diagonally sheared to normalize to the 40-year trend -- there are some broad enough bends that it's debatable whether a trend of 40 years really 'exists' but if one supposes that there is and shears it to the right degree, a case can be made for a bottom somewhere near here based on deviations from and reversions to the mean (purple line).

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Posted 10/09/2008 10:46PM #1
Thanks Paul

A couple of dumb questions, or actually request for opinion. I don't have anything in the market, so it is mostly curiosity.

A friend who studies the issue, said that after the 1929 crash, it took three years to bottom out, and therefore there was plenty of time for folks to get out of that market without getting completely soaked, if they had known it would have continued to fall. Sure, would have lost some money, but not got clobbered.

He also said that if you stand away from the monitor to view the Nikkei 19 year chart, to blur the details, it appears pretty obviously just a straight line down. As with 1929, plenty of time to exit without being soaked, if someone had 'future knowledge' of the trend.

So if someone had been extremely cautious and waited several years to re-enter the Japanese market, they would still have got soaked unless they lucked up to sell on a transient up-spike?

Just curious about your opinon on those observations. I know less than nothing about it.

If a lot of people are of the same opinion, it seems that the market could go very low as they all exit the market 'as orderly as possible'?

Thanks