Tick or trend?

It’s not the latest Halloween ritual (sorry, couldn’t resist), but rather the basic choice every investor, corporate executive, analyst must make in forecasting what’s most likely to come next.

If you had been paying attention in March, you could have made 48.2% since then on your investment in the DJIA index.  If you did, congratulations—but don’t spend the money just yet.

With some of the world’s major stock markets up by over 50% in six months, it’s clear some kind of serious rally is under way.  But is it a trend—a genuine rally that signals a bottom, and an end to this long recession?  Or is it just a tick—a “sucker’s rally” that gives everyone false hopes before plunging us to even greater depths?

So far, in some respects the stock market is behaving like it did during 1929-30.  In the figure below, you see where we are now compared to where “we” were in 1930.  (The numbers are accurate, however the timelines are not drawn to scale.)  Then, as now, we lost about 50%, then in short order gained about 50%.  (Note to poets:  This does NOT put us back to where we were, but rather at 75% of that.)

1930a (Small)

Now some are forecasting that the next bull market is already under way, and that DJIA will double from here, putting it well over 25,000.  That the recovery, in other words, will be V-shaped, as shown by the dotted gray line.

Read the rest of this entry »

  • Latest Posts

  • Topics

  • Archives

  • About this site

    COMPETING IN THE KNOWLEDGE ECONOMY is written by Timothy Powell, an independent researcher and consultant in knowledge strategy. Tim is president of The Knowledge Agency® (TKA) and serves on the faculty of Columbia University's Information and Knowledge Strategy (IKNS) graduate program.

    ===================

    "During my more than three decades in business, I have served more than 100 organizations, ranging from Fortune 500s to government agencies to start-ups. I document my observations here with the intention that they may help you achieve your goals, both professional and personal.

    "These are my opinions, offered for your information only. They are not intended to substitute for professional advice."

    ===================

    We typically publish monthly on or about the 15th of each month, subject to our client workload. Use the RSS feed links below to subscribe to posts and/or comments. Better yet, follow us on Twitter @twpowell to be notified of new posts and related developments.

    Thanks for reading! Please mention us to others and add your non-spam comments and suggestions -- we value your input.

    ===================

    COMPETING IN THE KNOWLEDGE ECONOMY is sponsored by the Knowledge Value Chain® (KVC), a methodology that increases the value and ROI of Data, Information, Knowledge, and Intelligence.

    The contents herein are original, except where otherwise noted. All original contents are Copyright © TW Powell Co. All rights reserved.

    All KVC trademarks, trade names, designs, processes, manuals, and related materials are owned and deployed worldwide exclusively by The Knowledge Agency®. Reg. U.S. Pat. & TM Off.

    ===================

    E SCIENTIA COPIA. Knowledge is the Engine of Value.