Saturday, May 16, 2009

Great Bear Market 1973-1974

Chart from

The bear market of 1973-1974 is considered one of the great bear markets like 1929-1932, 1937-1938, 1939-1942, 2000-2002, and 2007-present. On January 11th 1973 the S&P 500 hit a high of 120.24 and then proceeded to drop 48.2% to a low of 62.28 in October of 1974. The bear market lasted 20.7 months and rallied 29% to a high of 82.76 over the next 12 months. I think Richard Nixon getting the country off the gold reserve standard in 1971 and the expansion of the money supply over the next 38 years is the main reason the country faces the economic problems today. The S&P 500 increased 25 times from the low of 62.28 to 1578 in October of 2007. If that isn't a huge bubble I don't know what is. I think the S&P 500 will go below 400 before the end of 2010. Only time will tell.

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