| |
| |
My recent Sixteen Real Dow Recoveries update prompted an email from Paul Hanly, a private investor and market watcher in Australia. Paul has an interesting perspective on this table from the original post.
Paul writes:
|
I had a look at your list of recoveries and the percent recovery after 2, 4, 8, and 12 years. I created a similar table with all lower-than-current days as red and all higher as green.
Above average recoveries seem to have a less than 50% chance of being above what they are now at future year ends for 2 4 and 8 years. It appears that the higher the recovery in the first column [top chart], the less chance of it being sustained above current levels at least until after year 8. If you discount 1932, it seems that the occurrence of relapse for greater-than-average recoveries is even higher. If you add in the highest below-average recovery at this stage you get even more proportion of relapses, and even more again if you discount 1932. Note that the top left of the table is predominantly red and bottom right is predominantly green. |
Thanks, Paul. To your last observation I would add that the 1970 rally is an outlier as a consequence of the 1973 Oil Embargo and decade of stagflation that followed.
|
|
