Educate Yourself - 1973-74 vs. Today

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1973-74 vs. Today
Brian Trumbore
President/Editor, StocksandNews.com

With the recent bounce off the lows in the stock market, I thought I’d look at the numbers during the 1973-74 bear market to point out how one can miss some huge gains off the bottom…not that anyone can call that exactly.

Following are the monthly closing highs and lows for the Dow Jones, 73-74.

1973

Jan 1051…992 [1051…1/11/73]
Feb 996…947
Mar 979…922
Apr 967…921
May 956…886
Jun 927…869
Jul 936…870
Aug 912…851
Sep 953…880
Oct 987…948
Nov 948…817
Dec 851…788

1974

Jan 880…823
Feb 863…803
Mar 891…846
Apr 869…827
May 865…795
Jun 859…802
Jul 806…757
Aug 797…656
Sep 677…607
Oct 673…584
Nov 674…608
Dec 616…577 [577…12/6/74…bear market -45%]

But, by May 1975, the Dow Jones was back to 858 (5/14/75…a 49% bounce off lows), and 878 (6/30/75…52%).

By January 1976, the Dow was at 975 (1/30) and two months after that 1009 (3/24…or up 75% off bear market low in about 15 months).

Now take a look at our current market cycle.

October 2007, the Dow Jones peaks at 14164 (10/9). But it wasn’t straight down from there. As of 12/10/07, the Dow was still at 13727.

Then the Dow closed at 11740 on 3/10/08, or 17% off the all-time high. But two months later it was back to 13028 (5/19/08). ‘Whoopty-damn-do,’ as former NBA star Derrick Coleman would have said had he been asked at the time to analyze the market’s movements.

Then, two months after this, the Dow had fallen to 10962 (7/15/08) or 23% off the high, officially a bear market.

A month later, the Dow was back to 11782 (8/11/08). Then September hit.

9/12/08…11421
9/19/08…11388
9/26/08…11143

What crisis?! Well, of course the intraday activity, as we dealt with the likes of Lehman Brothers, AIG, and Merrill Lynch, was stupendous, but you could have easily been faked out that the Dow Jones had stabilized.

Wrong.

Two weeks later the Dow was at 8451 (10/10/08).

Three days after this, though, the Dow was 9387 (10/13/08). And later, 9625 (11/4/08).

But then a sickening slide to 7552 (11/20/08)…and a last rally back to 9034 (1/2/09), before yet another crash to 6547 (3/9/09).

The current rally off the lows? That’s tomorrow’s history.

[Sources: Yahoo Finance; “The Dow Jones Averages, 1885-1995,” edited by Phyllis S. Pierce]

Brian Trumbore

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