Dow Deja Vu?

I wish I was able to find a decent chart showing this properly. I’ll just explain it in writing.

I was looking at a chart from Crestmontresearch.com from the years 1965 – 1981, more particularly the last Bear market. In that period stocks clung strong to 875 points. Although varying on and off it wouldn’t break free of 1000 until the mid-80s.

What I saw was truly incredible. In the year 1965 the Dow hit an all-time high of 1000 (similar to the tech boom in the late 90s). It then shed off about 25% over the next four years to 640 in 1969, (again similar to the Dow dropping toward the 7250 line). It then staged an amazing recovery to pass its previous highs to a new high of 1050 in 1972, (I see you’re with me). During this time volatility was at an all-time low and it held a P/E ratio of 15.

What happened next? The Dow then plummeted 460 points (more than 40%) over the next two years. To date the Dow has more or less mimicked this trend extending the peak-to-trough about 1 year, as well as the trough-to-peak another year.

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One Response to “”

  1. David Templeton, CFA Says:

    I have a chart I can email to you if you want it

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