Tuesday, May 27, 2014

Ed Yardeni on that stupid 1929 chart

Yet more things to read.

BI - Ed Yardeni says hey, you remember that 1929 chart? Remember when a whole herd of retards across the golbuggoblogosphere were saying that the market was re-enacting the weeks before the disastrous 1929 crash? Remember that chart? Here's the version that known permaclown Mark Hulbert ran:
Ooh scary!

Here's Yardeni:
In the 2/18 Morning Briefing, I wrote: “What would it take to repeat the grim fundamental underpinnings of the scary scenario of 1928-1933? Another Lehman moment would do the trick, and make Hulbert and the other promoters of this grim scenario right on the money. Of course, there have been several variations of this ‘endgame’ scenario provoking anxiety attacks and corrections since the start of the current bull market. But Godot has yet to show on stage.”
Of course, he shouldn't have bothered wasting his valuable time on this chickenshit. Because even another Lehman wouldn't have created that crash. That time was different.

In 1929, on the first day of the crash, the wirehouses cut all connections out of NYC, so nobody outside of Wall Street knew what was going on and the big boys were able to dump stocks into uncancelled bids, thus getting out first. When the rest of the world was finally let in on the story, the subsequent cascade crash was more a case of people exiting the market in disgust at having been taken by criminals.

Plus the makeup of the 1929 Dow has nothing in common with today's US market. Here was the Dow 30 before the October 1929 crash:

Allied Chemical General Foods Paramount Publix
American Can General Motors Corporation Radio Corporation
American Smelting General Railway Signal Sears Roebuck & Company
American Sugar Goodrich Standard Oil (NJ)
American Tobacco B International Harvester Texas Company
Atlantic Refining International Nickel Texas Gulf Sulphur
Bethlehem Steel Mack Truck Union Carbide
Chrysler Nash Motors U.S. Steel
Curtiss-Wright National Cash Register Westinghouse Electric
General Electric Company North American Woolworth

What you don't see: financials (Visa, JP Morgan, Amex, Goldman). No pharma (Merck, Pfizer, J&J). Um, quite obviously no computers (Microsoft, Cisco, Intel). And very little in the way of multinational presence, generally. Shit, most of those 30 companies are commodities.

This market is not the 1929 market, so anyone asserting a parallel should always be mocked first, and then listened to only if you've got spare time and braincells to lose.

Anyway, the point remains. What's happened since this stupid "1929 parallel" chart hit the blogoverse?

This. This is what has happened.

You'll note the absolute lack of a 50% fucking crash over these past few months.

It sure was fucking foolish for you people to have given these doomers like Hulbert even a second of your time, no?


  1. Replies
    1. They're comin' to your town, they're gonna party down. They're an... American... can.

      Or something.