Saturday, February 28, 2009

Could the Market Go Lower From Here?

Sure it could.

This chart indicates that the Dow could decline another 50% from today's levels. This is not a prediction, only a possibility worth considering.

For some long-term perspective, this chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, the inflation-adjusted Dow has gained a mere 55% since its 1929 peak and gained only 10% since its 1966 peak – not that impressive considering it took many decades to achieve those gains. It is also interesting to note that based on an inflation-adjusted Dow, the current bear market actually began in 1999 only to be interrupted briefly by a multi-trillion dollar credit bubble. That bubble has burst, of course, and the Dow now trades at a level not seen since 1995.

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