Economic Meltdown (seconda parte)

[kandrathe]

The market has been over inflated for going on a decade. The market needs to drop to be at the historical climb rate. Right now, that drop needs to take the market into the 10,500 range to get to that historical climb rate. If you look at any of the graphs of the DJIA since it's inception back at the turn of the 20th Century, it has doubled roughly every 12 to 15 years. As of 2007, just at it's peak, it was triple where it had been from the prior 12 to 15 year cycle (it was around 5000 in the mid 90s which was the historically proper level). When the market dropped in 2008 and worked back up to 10,000 in early 2009, it was back to it's proper amount. Then it took off again at a pace that was beyond the historical pace. What we're seeing now, is a re-correction that will likely bring the market back to its proper historical pace (which should put it at around 10,500).

Roughly it should mirror the level of investment and capitalization in the market. There were tremendous growth spurts in productivity in the past 30 years that might alter the trajectory of the DJIA, and then there is the matter of the changing nature and accuracy of the DJIA itself.

[attachment=58]

The above is the historical DJIA, and I added a curve to show a possible projection other than linear. Thinking about the creation and destruction of companies, it probably should be curved upward as more companies are created and increase in value do to investment than lose valuation or go bankrupt.