Volatility in the Stock Market

[question everything]

Yesterday on the Daily Show with Jon Stewart, Amity Amity Shlaes, who was talking about her book about the Depression (where she really trashed FDR) mentioned that many of the high gains were during those years.

So I found this graph, from a story in today's WSJ, interesting



As much as we welcomed yesterday's market, we need to be wary, I suppose.

[On the Road]

1. Absolutely

The fact that the gains were so big and came on such light volume makes them very, very suspect. Normally decisive bottoms come on high volume.

Remember the two-day snapback from a couple of weeks ago? That didn't last either.

[dipsydoodle]

2. The percentage changes are not much to go on anyway

An 11.08 gain doesn't even completely restore a previous 10% loss. I guess they're just to keep the whooppee brigade happy and distract from the actual problem.

[Warpy]

3. Thanks for that bar graph

I'd seen a line graph of 1920-1950 before, showing the many sucker rallies between the one day crash in 1929 and the depth of the market 4 years later, but this one brings it all home, too.

No, I don't think we've seen the bottom and yes, I think we'll probably dip below it for a while before this mess is over.

Remember, we need to rationalize the economy, addressing the demand side as well as the supply side, before we get any sort of equilibrium.

The GOP still doesn't admit the demand side exists.

[girl gone mad]

4. That woman seemed like an idiot.

That's the first time I've heard anyone try to pin the blame for our current mess on LBJ.

Jon seemed to have a better understanding of this crisis than she did.

[pam4water]

5. I agree. She complaid about putting the robber barons on trail.

Some stuff she said before that was iffy. But once she said that I knew she was full of shit. I don't think the tariffs made that much difference one way or another but you hear the Milton Friedman types jump on and blame them for everyone to distract for the real causes.

[A HERETIC I AM]

6. Market history reveals that if you take out the 10 best days over a 20 year period...

your average rate of return drops dramatically.

I don't have a similar graph to put up just now, but it is a fact, that on any given 20 year rolling period, the majority of the gains are made on less than 5% of trading days.

One must stay in the market in order to realize those gains. Trying to time the market is never as profitable as time in the market.