Tuesday, September 11, 2012

Depressions compared: DJI post 1929 - Nikkei post 1989 - S&P 500 post 2000

The first chart shows an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.

Here is the nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.

This chart is the comparison from the 2007 nominal all-time high in the S&P 500. This series also includes the Nasdaq from the 2000 Tech Bubble peak.

As these charts illustrate, the SP 500 index of US large cap stocks has fared much better than the other indexes in this comparison.

Credits: The "Real" Mega-Bears by Doug Short - September 9, 2012