The market is depressed it’s not the “Depression”

The market had a huge day today with the Dow rising 936 points!  Following the biggest rise in the markets history I thought I would post a few figures from Friday for all the people who pulled thier money out the market last week in a panic and who most likely are questioning the move after today.

As of Friday’s closing bell the US martkets were down ~ 18%, EU markets ~ 25% and the Asian markets ~ 30%.  While an 18% slump sucks is it enough to make me panic?  Well let’s look at a few additional indicators today vs. the "Depression"

  Today "Depression"
Industrial Production

Down ~ 1% Down ~ 44%
Unemployment ~6% ~ 25%
Housing payments in the rears ~ 4% ~ 40%

The market conditions today are a long way from the conditions in 1929.  Things look much closer to the market crash of 1973/74 where the Dow lost ~ 45% of its value.

Now let’s look at an investmetment made in 1972 and present day value.  This would be representative of a thirty somethings investment today with a retirement target cashout.

I looked at an investment in XOM made 01/70 and sold today, even following last week the gain is ~ +843%.  The Dow inthe same time perios is ~ +1060%.

I also looked at the past 10 years from Oct 1998 til today which shows a ~ +107% for XOM and ~ +19% for the Dow.

Conclusion, the market is not a place to put your cash if you need liquidity.  As a long term investment the market is the place to be!

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