The Internet has allowed computer users to access information instantly, on just about any topic. Google makes the search easier. Putting the current financial crisis into perspective will take years of analysis, but facts and figures can be found to provide a snapshot comparison to the Great Depression and now, without having to search through encyclopedias, old newspapers or history books.
As you can see from the latest CNN Money graph of the Dow Jones Industrial Average, we are still in negative territory. Since it is still early, predicting the outcome of the market today is impossible. However, we can still get a sense of where we might be.
Using our instant access to information, let’s meander back in history. Analogies to the Great Crash of 1929 keep popping up, so let’s compare today’s situation to the 1929 stock market crash. Using Google, let’s seek out the facts.
The following facts and figures are a compilation of information from Stock Market Crash, CNN Money, Wikipedia, and the Dayton Business Journal. All of these sites were found by Googling questions like,”Biggest one day loss on Dow Jones” and “Dow Jones stock market peak in 2007”.
Reviewing the situation of the Great Crash of 29, here are some sobering numbers. The New York Stock Market reached its peak on September 3, 1929 at 381.17. On October 28, 1929, the stock market lost 13% and on the following day 12%. The ’29 Crash reached bottom on November 13, 1929 when the market closed at 198.6 – not quite a 50% loss.
The market seemed to recover until April of 1930 when the New York Stock Market went into a downward slide that ended in 1933. At its lowest point on July 8, 1932, the stock market closed at 41.22 – an 89% decline from it peak on September 3, 1929. The stock market did not reach pre-1929 level again until 1954.
Looking at the stock market for the past year, we can see exactly how wide the current fluctuation has been. On October 9, 2007 the Dow Jones industrial average reached an all time high of 14,164. One year later on October 10, 2008, the Dow closed at 7,882.51 – not quite a 50% loss.
The largest one-day point loss was 778 points on 9/29/08 followed two weeks later by the largest one day point gain of 936 points on 10/13/08. Even with the largest ever one-day point increase, the Dow closed in negative territory at the end of the day on the 13th.
Comparing the two time periods, it is hard to tell if the low point on September 9, 2008 is the equivalent of November 13, 1929 low point or July 8, 1932 low point. The climb back above the 9,000 mark could be the short rally that ended in April of 1930 or we may be seeing the climb out of the current meltdown.
As with all history, we won’t really know for a year or two where the bottom was or when we started the recovery. Today’s top news stories are indicating that even if we have reached the bottom of The 2008 Stock Market Crash, we aren’t out of the woods yet.
The New York Times headline Despite Big Rally, Grim Outlook on Profits and Jobs does not inspire confidence in a quick economic recovery.