Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Thursday, November 11, 2010

Stock Market Performance Before and After WW II

Thinking more about Henderson's MIRACLE, I wonder --- has there ever been an economic MIRACLE or Boom, or even a pretty good time that was not accompanied by strong gains, or at least some sort of an up-trend in the stock market?

Wouldn't you expect that if there were an actual economic MIRACLE following WW II, there would have been a big gain in the Dow Jones Industrial Average?  Let's have a look.

What we find is that the DJI rose over the year following VJ Day (Aug 15, 1945) from about 160 to around 212 in early-summer of 1946.  Then, Henderson's alleged miracle happened, and stocks fell back down to about 165 before the end of the year.   The 212 level wasn't reached again until spring of 1950.

Big DJI Deal!

While we're at it, have a look at how the market performed during the New Deal.  As you can see above, from the 1932 daily closing low of 41.2, it rose to 194 in the Spring of 1937.  That's when FDR tried to balance the budget, and the wheels came off the still-recovering economy.  The market never fully recovered from that blow until after the war was over.

Just for kicks, I put DJI performance from the 1932 low and the 1944 low on a percentage gain scale to see how they stack up.

X-axis is calendar days after the respective lows, running out for six years.

Speaks Volumes, doesn't it.  Even after the 1937-8 kick in the teeth, New Deal performance was still far above what the first few post-war years were able to accomplish.


Mutual Funds said...

I’ve been visiting your blog for a while now and I always find a gem in your new posts. Thanks for sharing.

Jazzbumpa said...

Thanks -

I appreciate that a lot.