Tuesday, October 6, 2009

Calendar effect check

Warning:  this is research, not investment advice.  You invest at your own risk.

On a monthly closing basis it was ten years ago December that the Dow Jones Industrial Average peaked.  The chart below shows average relative price movement of the Dow for each ending-digit year of the decade since 1928 (data from Yahoo Finance). 


Click on graphs for larger image in new window.

The early years of the decade usually have the worst bear markets and the worst business slumps, the Thirties, the Seventies and the Eighties especially.  Other decades have fared relatively better in the early years, although the best results generally come mid- to late-decade.

Ignoring quibbles about when decades begin, we’re about ninety days from the end of the Oh-Oh Decade and the start of the Twenty Tens decade.  The market should be topping soon if it remains true to form.  And as indicated in the last “animal spirits” update, the chance of another business cycle slump in the next five years appears to be high.

Much the same picture results from the NASDAQ (data from Yahoo Finance).


1 comment:

  1. Would I be correct in interpreting your analysis as meaning there won't be a signficant stock market correction until 2012 or later?