The “real” mega-bears

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Doug Short maintains a particularly interesting suite of stock market charts on his site By means of example, he has just updated his chart entitled “Real mega-bears”, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the tech bubble in March 2000, the Dow from 1929 peak, and the Nikkei 225 from its 1989 bubble high.

“This chart is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the ‘real’ all-time high for the S&P 500 occurred in March 2000.

“These charts are not intended as a forecast but rather as a way to study the today’s market in relation to historic market cycles,” said Doug. Sure, the S&P of 2010 is not the Dow of 1929 or the Nikkei of 1989, but the chart nevertheless makes for interesting reading.

Click here or on the image below for a larger graph.

Source:, December 26, 2010.

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2 comments to The “real” mega-bears

  • Alessandro

    Personally I think that the right pricing of the S&P500, at this time of the year, should be 1211,23. We are way up of that number yet. Room for wide correction still… albeit still with a bullish outlook in general, IMHO.

  • An

    Alessandro’s comment here is about right except l would have chosen a 1150 before a continuation of the rally. We are way overbought here and l am sure more buyers will come once we have a reasonable sell off. This is not a good place to buy and dangerous to chase it.

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