Those who do not learn from history are doomed to repeat it.
The "Roaring 20's" Vs. the "Soaring 90's"
I hope you will take a moment to study the charts below. Notice that today's bull market is both twice as long and twice as high than that of the 20's. It is also MORE VOLATILE. To explain this, please notice the comparison between the '87 crash and the '26 correction. When the market crashed in '87 people didn't know what to make of it. It was the biggest single day percentage loss the DJIA had ever experienced (22.6%). But now, with the chart below, we can put the '87 crash in it's proper perspective. It was simply a correction in the middle of a bull market, just like the correction in 1926.
Notice the rally after the '87 & '26 corrections leading to the smaller corrections in 1990 & 1926. Then the general public starts buying in to the market. By January 1, 1929, 50% of the money in the market had come in in the previous 2 years. In August, 1997, 50% of the money in the market had come in in the previous 2.5 years. Notice the similarities in the corrections, and the parabolic, upward curve that is the essence of a mania. Notice the increased volatility in the early '29 correction vs. the '97 correction. Did you know that in January 1929, England and parts of Europe were in financial turmoil? That led to the 5-point correction from January to May of '29. It was very similar to the current Asian financial turmoil. Just look at the 5-point correction from August of '97 to January '98. Very similar indeed.
The '87 crash will be viewed as a mini crash compared to the REAL CRASH we are about to experience. After that happens the '87 crash will be rightfully referred to as simply a "correction", although it was the biggest short-term correction ever. I call it a correction because the market made a new high just 2 years after the crash. The REAL CRASH I'm referring to will be the '98 crash. It has potential to crash down more than 50% in just a few months time. Remember, the '29 crash was nearly 48%, and I have demonstrated that this market is more volatile than the '29 market.
On the next 2 pages I will show you the "two steps back" bear market from 1929-32 and the "three steps forward" bull markets since the 1932 low. I will also show you the bear markets that inevitably followed those bull markets.