Today's Market Observation 02.02.2010 Mon Tue Wed Thu Fri Griess Archive

Long Term Perspectives and a Recap of
4th Quarter Real GDP

BY ron Griess | february 2, 2010

This is a monthly chart of the Dow Jones Industrial Average (DJIA) beginning in 1885.

0202.01

"Regressing to the mean" is a term often cited by financial commentators. In truth, market prices spend very little time at a "mean." If our trend line is considered a "mean," the following chart shows just how little time the DJIA has spent at the "mean," especially since 1925.

0202.02

Our friend, Jim Bianco, first shared the following chart with us in the early 1990's. The purpose of the Market Capitalization/GDP calculation is to try to relate the market value of the stock market to GDP. What the chart shows is just how dramatic the "bubble" was at the top in 2000 compared to any other time since 1925.

0202.03

The following chart presents the Total Market Capitalization data with an additional twist, gold adjusting and inflation adjusting. Our experience in working with both gold and inflation adjusting tells us that doing so makes secular cycles much easier to discern.

0202.04

The past decade or so has seen a resurgence in the popularity of investing in commodities. The following three charts compare the S&P 500 to Gold, Crude Oil and Copper.

0202.05
0202.06
0202.07

We finish this observation with four charts that recap the 4th quarter GDP report of last week.

0202.08

0202.09

0202.10

0202.11

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Long Term Perspectives and a Recap of 4th Quarter Real GDP

BY ron Griess | february 2, 2010

Long Term Perspectives and a Recap of
4th Quarter Real GDP