Tuesday, February 24, 2009

S&P 500 Now Down 52% From All-Time High

There have now only been two periods in the history of the S&P 500 where the index declined more than 50% from an all-time high -- 1929 and now. In the first chart below, we highlight the percentage change from the S&P 500's most recent all-time high to its current level, along with the change from the 1929 all-time high over the same number of days. Although the front-page headline in the WSJ today is "Stocks Drop to 50% of Peak," the S&P 500 was actually down 50% from its peak back in November. It just recently hit the 50% threshold again.

What is ominous about the first chart is that only four trading days separate the first time that the S&P 500 went 50% below its all-time high. Ultimately in the bear that started in 1929, the S&P 500 dropped a whopping 86.19% from its all-time high. This low occurred 679 trading days after the all-time high was reached, or about two years and nine months. The current decline has lasted one year and four months.

But by far the most depressing aspect of the 50%+ decline back in the 1930s was how long it took for the index to make a new all-time high. Following the peak in 1929, the S&P 500 went 6,251 trading days before hitting a new all-time high 25 years later.

Obviously a lot more has to happen for the market to continue lower and reach -86%, but the current declines aren't in good company.

Declinefromhighs

Declinefromhigh

No comments:

Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.