Monday August 22 2022
I believe we are finally at a repeat of the 1973-74 50% meltdown. An unpopular President, runaway inflation, political polarization, high crime, high gasoline prices, and developing union problems. Interest rates had begun to rise as well. Did you notice the British subway workers shut down the entire system last week?
Here is a graph of the DJIA from October 1972 - Dec 1974
The graph does not do justice to the market chaos of this time.
Wall Street was re aligned with traditional investment banking firms like White Weld being absorbed by Merrill.
This time we see upstarts like Robinhood in trouble. Investors have poured into shaky Meme stocks and ARKK ETF.
the arrows at left mark the highs occurring the same time of hear as 1972-3. The right hand arrows reflect a rally which is already ending for ARKK and most indexes
Then as now the markets peaked in Fall 1972 returning to near their old high of 1,050. Now we have anew high around 36,500. the market sold off into August, this time into June. Then it recovered into October, this time to August 16. Then the decline resumed. the last decline was from June to Dec 1974. Yes the DJIA fell 50%. but many stocks like Credit Suisse and Nomura have already lost half or more of their value.The meme stocks are the same story. Cineworld takes bankruptcy. Bed Bath and Beyond teeters.
History may not repeat as Twain observed but it sure does rhyme.
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