History Rhymes

As we are one month inside a multi-month bear market rally this might be a good opportunity to once more remind all bears that…

History does not repeat itself – but it rhymes.

Most history buffs know what followed a few months after Black Tuesday (October 29th, 1929) – the market eventually found a temporary low and then started to push back up (i.e. bubbles 7, 8, and 9 on the chart below). Pundits and politicians soon pronounced the bear market to be dead and ‘the worst to be over’ – sounds awfully familiar, doesn’t it?

Things haven’t changed a bit since 1929, as a matter of fact they have gotten a lot worse. We are now being bombarded by a very sophisticated cocktail of ‘media spin’ on a daily basis, and even for the most hardcore bull it’s often too easy to relent and to buy into the bullshit. What’s worse is that the truth is out there – if you bother to look for more than 5 minutes. But sadly it seems very few are even remotely interested in the truth and wishful thinking rules the day. The collective primary motivation appears to be to ‘somehow’ restore the status quo – and at all cost – even if that means to sacrifice the future of our children and grand children.

My personal remedy and mental reset from the daily freak show is this chart of the DJI covering the 1929 – 1933 crash. The numbered bubbles indicate headlines that were printed in the major media at each step in the way:

Click on the image above to be taken to the headlines – besides the entertainment value it will give a deeper understanding of what is meant by ‘the slope of hope’, a phrase originally coined by Robert Prechter (i.e. co-author of our bible) .