Quote:
Originally Posted by Abbaddabba
Was I quoting you when i made that first comment? Derrr
So here's a basic inflation adjusted S&P garph (chosen because it makes the variability more defined).
http://www.multpl.com/inflation-adjusted-s-p-500
Tell me where you believe the trend starts so we can test your theory against the actual results.
No one trades off of an inflation adjusted chart. I was looking at cash SPX, you can use the max setting on Yahoo finance:
http://finance.yahoo.com/chart/%5EGS...5nZSI6Im1heCJ9
Frankly this is a two year old thread that I had forgotten about but I am grateful for the bump because of my trading (not because of the quality of the conversation).
Anyway, I'll indulge you by revisiting the cycles. In reverse chronological order, here is a historical narrative of the SPX for the past half century:
1.
Artificially low interest rates & Fed (really not just the Fed)
funny money rally from the Jan '09 lows.
That is about 8 years ago.
2.
Dot-com double top that saw a rally from the Jun '02 lows (bursting of the dot-com bubble) to a high of 1576.09 in Sept of '07 that was followed by subprime and the "'08 financial crisis" which ended with the intervention of the Fed at the above mentioned point in price and time.
Whole thing about 6 years.
3. The
Dot-com bubble which was a steep rally from the mostly sideways action in the spring of '94 to the 2000 top around 1500 to the previously mentioned lows.
Whole thing about 8 years.
4. The
post Black Monday (87) recovery until the high of in early '94 through the mostly sideways action that proceeded the Dot-com bubble.
This was 7 years.
5.
The '87 lows to the '82 lows. The '82 lows are very obvious on your inflation adjusted chart and were right after the energy crisis & the Iranian Hostage Crisis.
This is about 6 years.
6.
The '82 lows to the lows of the mid '70s, just post the oil shock and the end of the Vietnam "War." This (& the cycle before it) was a terribly interesting period for the US (and the world financially). It saw Nixon, Kissinger, & Volcker take us off the gold standard, it saw crazy inflation & Vockler's treatment of it with 20% interest rates & it saw the oil crises with the OPEC embargo of '73.
That is about 6 years.
That is all I feel like doing. As it is the end of an era (Bretton Woods) it seems like a good place to stop.
Please feel free to argue and whine all you want, but to those looking to get an edge in the markets it is a useful thing to be aware of.
And for the record, I am not saying go completely flat as a passive investor because 6-8 years has elapsed. I am saying that maybe it is time start lighting positions, taking profits, trading out of growth stocks and into companies with no debt.
Or maybe you should hold everything and start writing ST calls and buying some LT puts. IDK what is right for you. But this is useful information to people looking to learn.