Tags: comparing | today | market | 1970s

Comparing Today's Market With the 1970s

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By Friday, 17 April 2020 12:00 PM Current | Bio | Archive

Many are calling the recent market activity similar to the Great Depression of the 1930s.

And clearly there are some comparisons.

But what did not exist in the 1930’s was this level of QE.

During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities.

Now that the Fed has bought up debt to an unprecedented level and the government is spending trillions on stimulus, a depression is not out of the question.

I show you (and I believe this is completely original and unique content) that there is a better comparison though, to the mid 70s.

In the chart of the DJIA, you can see the depression, which hit a nadir in 1932 then came roaring back.

From 1954 (when the pre-depression highs were taken out) until 1970 the market enjoyed a huge run from 200 to 1000 in the DJIA.

Then, the first crisis hit with the Yom Kippur Wars.

Then came the oil embargo when OPEC formed and tripled oil prices.

Gas lines and oil prices spiked. We have a different type of oil crisis now-as in nobody using it and there is an oversupply.

The DJIA went from a peak in 1971-72 at 1000 and dropped to 577.60 in 1974. It took nearly 10 years for the market to return over 1000.

In 1972, oil was priced at around $22 per barrel.

Now, in 2020, with oil trading around those 1970 lows, what happens once the demand returns?

Throughout the last 60 years, every time oil has gotten down to around 20, something dramatic has happened to raise oil prices.

In my recent StockChartsTV video, I show you oil, gold, the bonds, governement spending, the dollar, GDP, unemployment, agricutural prices and CPI and how they all play a part in the comparison.

Michele ‘Mish’ Schneider serves as Director of Trading Education at MarketGauge.com. For 20 years, MarketGauge.com has provided financial information and education to thousands. MarketWatch named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish won the Top Stock Pick of the year for RealVision. Follow her on Twitter at Michele Schneider @marketminute.

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Many are calling the recent market activity similar to the Great Depression of the 1930s.
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Friday, 17 April 2020 12:00 PM
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