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At 06:23 PM 7/22/97 -0400, Christopher McMurry wrote:
>You've all heard of the cow that jumped over the moon. Now, it seems,
>her husband the bull has gone after her to make sure she's not gettin'
>into some hanky panky with any little green men.
>
>So the question is, when will he catch her and to his horror find that
>his little milk maid is actually a grizzly bear in cow's clothing?
>
>I looked at some numbers that I thought the list might find
>interesting...
>
>Price (using the Dow Jones Industrial Average)
>-------
>The 1921 - 1929 bull went from a closing low of 63.90 to a closing high
>of 381.17. This is an advance of 495%.
>
>If we multiply the 1987 crash low (on a close basis) by 4.95, what do we
>get?
>
>1738.74 x 4.95 = 8607
>
>If Little Miss Cow Bear turns out to be the same distance over the moon
>as she was in the '20s, then our Big Bad Bull is about to catch her.
>
Dear Chris,
As I've mentioned in previous postings, simply comparing numbers (which
actually are arbitrary, since you could easily pick a time slot before the
'87 crash) is useless. What was the cause of the crash of '29? The cause
is pretty well understood: The Federal Reserve Bank reigned in over a third
of the credit it had easily provided in the previous 10 years, in a short
time frame- calling loans etc. In other words, the stock market was rising
at a relatively normal pace, when cash was pulled out from underneath it.
The market is driven currently by boomers using it like a savings bank.
The mutual funds are really the driving force behind the DOW's rise. Very
different financial circumstances. Who's to say that a national panic
won't set in? Unlikely though.
Dan
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