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Market bears resemblance to '87 crash - Citigroup

Discussion in 'Shares' started by islandgirl, 17th Nov, 2006.

  1. islandgirl

    islandgirl Well-Known Member

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    This was an article that appeared on yesterday miningnews.net. Would be interested in your opinions.

     
  2. Tropo

    Tropo Well-Known Member

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    Market bears resemblance to '87 crash - Citigroup

    Just another opinion....
    Do not forget that market can hold extreme values for quite some time before reversing - and will always reverse.
    :cool:
     
  3. islandgirl

    islandgirl Well-Known Member

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    I always find it interesting that when the market is high there is always a host of people saying its going to fall, whether it be property or shares. Sooner or later, by the law of things, they will eventually be right
     
  4. Insight

    Insight Brisbane Buyers Agent

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    Correlated Decades

    Well this is an interesting coincidence.

    Yesterday I wrote a post for my blog on the similarity between the 00's and 80's, on a visual inspection they are the two most highly correlated decades in price movement through the first 7 years.

    I can't think of any economic reasons why we should be copying the 80's though and we would need a LOT of exuberance before we match what went on there. We aren't even close yet.

    [​IMG]

    The different returns of $1000 invested throughout each decade.

    * Monthly closing price data for the XJO used, not the accumulation index.
    * Dec 1989 - Dec 1999 used for the 90’s… etc. First data point January 1901 = 10. Last data point October 2006 = 5384

    1900’s: $1700
    1910’s: $1294
    1920’s: $2000
    1930’s: $1477
    1940’s: $1492
    1950’s: $2134
    1960’s: $2010
    1970’s: $1151
    1980’s $3443
    1990’s: $1912
    2000’s: $1708

    Link to my blog post on the subject
     
    Last edited by a moderator: 17th Nov, 2006
  5. MrDarcy

    MrDarcy Well-Known Member

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    Very interesting graphes. Have you tried same but not on round decades, but on 10 yr periods. For example, instead of 1979-1989,1989-1999 etc
    compare all the combinations of 10 year periods, 1979-1989, 1980-1990, 1981-1991 etc up to 1996-2006

    Alot more numbers, but which 10 year period performed best, compared to last 10 year period, may be more relavant.
     
  6. Tropo

    Tropo Well-Known Member

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    Well .... a bit of statistics...You may find this interesting...

    In the period of 32 years between 1956 and 1988 the mutual funds in the USA analysed the cash-to-assets ratio of the funds and they used this as an indicator of whether the fund is bullish or bearish.
    Guess what .......they got it right on only 4 occasions - and these 4 occasions you may consider as coincidence.
    Do you think that fund managers in Australia are any better ????.

    In Australia all analysis of equity markets should start with an analysis of DOW and S&P500 which is more representative of the market as a whole than DOW alone. Remember - if Wall Street sneezes we catch a cold.

    There are few common social indicators (features) leading up to crashes.
    - General public is involved in speculation ( taxi drivers are telling you what you should buy)
    - Increased number of economic commentators who say the boom will last forever (as you know - only diamonds are forever).
    - Big number of magazines dealing with the stock market, and "gurus " selling fool-proof trading systems.
    - Easy access to easy money for speculation ect...

    If you are interested in the mechanics of booms and busts I would recommend excellent book " Manias, Panics and Crashes " written by Charles P. Kindleberger.

    PS: Stocks are now at what looks like a PERMANENTLY high plateau "
    Economist IRVING FISHER - The week before The 1929 crash.....
    :cool:
     
  7. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Will history repeat?

    Poor Australia! Blindly following the US down every valley. At least we have Kevin. Kevin............ Wake up Kevin!



    Johny.
     
  8. AsxBroker

    AsxBroker Well-Known Member

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    This is why whenever any tries to tell me "It's different this time" I cringe, it's not different this time, it's going to end in tears.
     
  9. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Hi

    Is it my imagination, or are we recovering too well? This V shaped recovery is rising too sharply over such a brief time frame! It was great to see a bottom, but I'd sure hate to return there.



    Johny.
     
  10. AsxBroker

    AsxBroker Well-Known Member

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    Hi Johny,

    IMHO I think it's an Inverse Head and Shoulders.

    Remember, every previous high surpassed at some time in the future.

    Cheers,

    Dan
     
  11. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Hey AsxBroker

    If this is your "inverse head and shoulders", I hope we have a flat head! I knew it was too good for the Asx200 to rise so steeply. I wonder what the "trigger" was for the fall?





    Johny.
     
  12. AsxBroker

    AsxBroker Well-Known Member

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    Hi Johny,

    Looking at the two year XAO graph drawing a downward trendline (resistance) from Jan '08 through Jun '08 to Jul '09. Another resistance trendline tilting upwards can be drawn from Dec '08 to Jul '09 (neckline). Mid Mar '09 was the head, Jan '09 left shoulder and Jun '09 being the right shoulder. Now that the trend has been reversed the first downward trendline is now a support line. A third trendline (support) can be drawn from the bottom of Mar '09 to Jul/Aug '09. You can read more here StockCharts.com - ChartSchool - Head and Shoulders Bottom (Reversal)

    Reality is if you look hard enough for a pattern you will find it, whether it exists or not.

    Only time will tell...

    Cheers,

    Dan
     

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  13. Tropo

    Tropo Well-Known Member

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    "Looking at the two year XAO graph drawing a downward trendline (resistance) from Jan '08 through Jun '08 to Jul '09. Another resistance trendline tilting upwards can be drawn from Dec '08 to Jul '09 (neckline). Mid Mar '09 was the head, Jan '09 left shoulder and Jun '09 being the right shoulder. Now that the trend has been reversed the first downward trendline is now a support line. A third trendline (support) can be drawn from the bottom of Mar '09 to Jul/Aug '09. You can read more here"

    Dan...
    Is it still raining in Sydney ?? :confused::eek:
     
  14. AsxBroker

    AsxBroker Well-Known Member

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    ............
     
  15. Tropo

    Tropo Well-Known Member

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    "Reality is if you look hard enough for a pattern you will find it, whether it exists or not."

    Correct !!...unfortunately...:p