Making Sense of the Chaos and Recognizing Cycles
Updated
Hey everyone!
Due to the recent financial sell offs, I've seen many panic and even claim "an end to financial markets". In fact, I understand their concerns. However, many of these individuals are newbs or have not taken a close look at the history of the asset(s) they hold. This is exactly why I have chose to begin posting again and would like to explore the long term history of a few assets and asset classes in an effort to calm any anxiety in others that I can. I will be focusing on historical market corrections.
Nothing of what I say or demonstrate is individualized financial advice to any degree. I am a speculator. You should not place trades based upon my analysis. You should not listen to a word I say. This is for pure entertainment value only and any losses you take is because you took that risk yourself. I am not liable for your actions.
Ok, let's do this!
A very long term look at SPX shows a volatile ride. The chart you see is a monthly log chart compressed to demonstrate as much of SPX as possible. As you can see there are many ups and downs. The data provided dates back all the way to the 1870s. So, this is where I will begin.
I will be adding pictures and details about the pictures in the updates or comments sections. It's been a while since I posted, please, be patient with me.
Due to the recent financial sell offs, I've seen many panic and even claim "an end to financial markets". In fact, I understand their concerns. However, many of these individuals are newbs or have not taken a close look at the history of the asset(s) they hold. This is exactly why I have chose to begin posting again and would like to explore the long term history of a few assets and asset classes in an effort to calm any anxiety in others that I can. I will be focusing on historical market corrections.
Nothing of what I say or demonstrate is individualized financial advice to any degree. I am a speculator. You should not place trades based upon my analysis. You should not listen to a word I say. This is for pure entertainment value only and any losses you take is because you took that risk yourself. I am not liable for your actions.
Ok, let's do this!
A very long term look at SPX shows a volatile ride. The chart you see is a monthly log chart compressed to demonstrate as much of SPX as possible. As you can see there are many ups and downs. The data provided dates back all the way to the 1870s. So, this is where I will begin.
I will be adding pictures and details about the pictures in the updates or comments sections. It's been a while since I posted, please, be patient with me.
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I hope this is the correct chart. I had some issues copy and pasting.
If this is the correct chart, then we will see that the very first large scale correction was about a 48% decrease in value from all time highs.
This is just one data point of many that I'd like to highlight. I will continue with more.
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Why the measuring tool did not show up, I don't know. But, you can measure for yourself, which is even better.Note
The second large scale correction was about a 40% decrease from all time high value.
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The next large scale correction was about a 38% decrease from all time high value.
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Then there was this huge correction that was about an 85% decrease in value from all time high value! Incredible!
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After the next pump above all time highs, we see price retract and dip about 20%.
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After the next pump above all time highs, the market corrected about 15%.
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Over and over again, we see these large scale market corrections.
It appears that they range between 15% and 85% dips; with 20% and 50% dips the most common.
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More data...
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More data...
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This is the current situation. As the data suggests, we are at about 25% decrease in value from all time highs. We have seen in the past that this could be the floor of the market correction. However, there is also enough data to suggest that the market could fall even further. Maybe even as far as an 85% decrease from all time highs.
It's challenging to tell where the market will go. No one has a crystal ball, right. However, I do find comfort in historical data. Our current situation is absolutely normal. I expect a further possible pull back, all the way to an 85% decrease; as well as a pump to previous all time highs and a possible extension afterwards.
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For someone like me, I see situations like these as opportunities. Large scale market corrections are very exciting for me because I see the potential in all of them.
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