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Friday, February 27, 2009

S&P500 Down 53% In Worst Bear Market Since Great Depression

All three major indexes are now officially 50% or more off their peak values made in 2007. This chart appears to include dividends reinvested to calculate how far the markets are down. The raw data below this graph uses actual trading data to calculate raw index returns, before dividends. No matter how you slice it, the bear market has been brutal to stock market investors.

Click for full size image

S&P500 Chart
Last Market High 10/11/07 at 1,576.09
Last Market low 02/27/09 at 734.52
Current S&P500 Price 735.09
Decline in Points = 841.00
Decline in percent = 53.4%
Max Decline = 53.4%
  • =>This means the decline from intraday high to intraday low is 53.4% and we are currently 53.4% off the peak.
  • =>The decline in the S&P500 from the closing high to the closing low was 53.0%

DJIA Charts
Last Market High 10/11/07 at 14,279.96
Last Market Low 02/27/09 at 7,033.62
Current DJIA Price 7,062.93
Decline in Points = 7,217.03
Decline in percent = 50.5%
Max Decline = 50.7%
  • =>This means the decline from high to low has been 50.7% and we are currently 50.5% off the peak.

  • =>The decline in the DOW off the closing high to the closing low was 50.1%

NASDAQ Charts
Last Market High 10/31/07 at 2,861.51
Last Market Low 11/21/08 at 1,295.35
Current NASDAQ Price 1,377.84
Decline in Points = 1,483.67
Decline in percent = 51.8%
Max Decline = 54.7%
  • =>This means the decline from intraday high to intraday low is 54.7% and we are currently 51.8% off the peak.
  • =>The decline in the NASDAQ off the closing high to the closing low was 54.0%
Bob Brinker has been fully invested for the full ride down. Worse yet, he was more bullish at the top than he was in March 2003 when he returned to fully invested after reducing his exposure to equities between January 2000 and March 2003. That is in March 2003 Brinker said we were in a secular bear market but in his June 2007 Marketimer he said the secular bear market that began in 2000 had ended in June 2006 (don't ask me how he came up with that crazy calculation.)

=> June 2007: Declared that a secular bear which he said began in March, 2000 had ended in June, 2006. Below is his "buy signal" history:
=> Aug 16, 2007 - January 4, 2008 @ 1411: Mid-1400's. Called it a “Gift Horse Buying Opportunity,” a term reserved in the past for only his very best buys. Brinker did not call his March 2003 “return to fully invested” recommendation with the S&P500 at 808 a “gift horse Buy” because then he thought we were in a secular bear markets.
=> January 20th, 2008 -- rescinded mid-1400's (recommended dollar-cost-average only)
=> Feb 10, 2008 @ 1331: Low-1300's
=> Aug 5, 2008 @ 1285: 1240 or less
=> Sept 2, 2008 @ 1282: Low-to-mid 1200's
=> September 16th -- rescinded low-to-mid 1200's (recommends dollar cost-average only)
=> January 15, 2009 – low-to-mid 800’s
This chart, courtesy of stockcharts.com shows the buy signals graphically.

Click for full size image

With any amount of luck, we are currently testing the November 2008 lows. Unlike Brinker, I have cash reserves and have been nibbling at stocks again near these lows. Since I have been buying down here, I will have something to show for the pain of this decline should the markets recover later this as Brinker predicts. Even if they go lower, it is less pain than being fully invested at the top, riding the markets down over 50% fully invested and not having any "portfolio cash" to put into the market.

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