Sexy Graph Demonstrates S&P's Historic Dismalness This Year
Here is a sexy graph breaking down the S&P's performance from 1825 to present, fitting each year into a column based on that year's annual returns, from -50% to +60%.
This chart's utility lies in its ability to demonstrate the historical dismalness of this year's market, as well as what we're seeing kinda just looks like we're experiencing the sad side of a typical bell curve. Just look for 2008 wayyyy far there on the left... Get the full effect by going inside for the big version.
[via DailyKos making a more legible version of a graph made by Value Square Asset Management, Yale University)
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Comments:
Let us hope that 2009 turns out to be just like 1933
@jdmba: Well if it showed the temperatures rising in 2008, then the alarmists would probably say "The temperatures are rising"
I'd be nice if there was a line connecting consecutive years so it would be easier to track where the stocks jumped the most. For instance we were doing fine last year, then dropped to the -50% region.
the 1931-1932-1933 trend also showed a GIGANTIC leap, although over 2 years rather than 1. (I assume this is the market recovering from its fall)
Looks like a big middle finger.
@jdmba: oh silly us, someone forgot the other side of this chart. Maybe it was 6,000 years ago when man was out hunting dinosaurs?
Then again, asking global warming "alarmists" (also known by their more boring name, the "scientific community") about the economy is a little bit like asking someone who looks at nothing but data to draw broad, dissmissive assumptions without any scientific basis, about climate change.
yeah, the key is realizing the association between subsequent years (of years on the far left) with big double digit % gains IN ONE YEAR!!
If you can afford it, KEEP BUYING STOCKS/FUNDS. Every month, if it keeps going down, keep buying more - once it rebounds, the investments made RIGHT NOW will profit more than those made in the past 20 years.
Unless armageddon hits, in which case we'll be too busy dodging fireballs to give a flying f$#@ about our investments ;^)
@lpranal: Sorry to ask what may seem like a dumb question, but: I heard many moons ago that they looked at the thermometers used in the orginal studies when they determined body temp, and found that they were inaccurate compared to todays thermometers, to the tune of like .5 degrees F. So my question: At what point does science concede we started taking accurate measures of temperature? Was it once we crossed into the digital scale?
@lpranal: The problem with your fuzzy little chart is that it only samples a little over a century. Climate shifts take centuries to take place. Ask the Middle Ages. This would be news if natural shifts in temperature weren't a part of our world's nature.
In other words, that a change is taking place does not prove man's involvement, which is implied in the blanket statement 'global warming'.
remember when 1991/1992 was "the worst economy in 50 years"?
@Git Em SteveDave loves this guy->★: Interesting point, the problem is that when talking about change in temperature, a few degrees difference isn't going to matter- if it's a consistent bias (i.e. always -0.5) then the change would still show up in the data. If it's inconsistent inaccuracy, that basically factors as noise and the trends would flatten out. We're talking about MOUNTAINS of data from around the whole world. Interestingly enough, pretty much every "unofficial" measure of climate -crop production, recorded events in things like writings and paintings, even chinese "meteorologists" (or what would be the equivalent, back then) are much less accurate, but have pointed to minor shifts throughout history, but nothing like what we've seen in the last century. Humans relied on their environment and were way more in tune with nature, if what was happening today happened thousands of years ago, there would be SOME kind of record of it.
@XianZhuXuande: These are very valid critiques against global warming (as opposed to simply writing people off as 'alarmists'). And yes, under normal circumstances climate change takes ages. This is because the systemic shift by which these changes have occurred throughout prehistory, the composition of the atmosphere, is also very slow to change. Flash forward to the 21st century and we have observed (and this has been proven and corroborated by many studies) the biggest, most rapid shift in atmospheric composition in millions of years. There have been natural climate shifts throughout history, also correlated with the composition of the atmosphere and greenhouse gasses. The problem is that while we have a pretty good, reliable comprehension of how the system works- how much CO2 we're producing, and how much produces how much of a change in temperature. There ARE many variables into the equations - the question isn't whether it's caused by humanity, it's how the complex system of global reacts. One example of such a variable is called Global Dimming (sorry for the wikipedia link, i'm too tired to use a better source).
It's a pretty big deal, IMO.
Think 2009 will be another 1933?
Think Congress will do their best to actually let the economy to rebound?
note the thick separating line above zero basically showing you that the highest probability of investing (as viewed on a calendar year basis) will be around 10%. When you factor in timing the market... history tells us that we are primed for a great return coming up.
Does no one else notice that the graph looks more like the back of a hand with a particular finger extended than anything else?
Squint at it, Is it just me?
The market's pretty bad this year, but what this shows is that it will rebound (as it always does). It's pretty natural for any system to fluctuate, and that's what the market is doing right now when you look at the big picture. It might not be great in the short term, but eventually it will turn around and grow more. Let it run its course, and we'll be way better off in the long run.
It'd be interesting to see it color-coded by which party was sitting in the Oval Office, especially the past century or so (I'm pretty much at the Bygones stage over the Whigs (bast*rds!)).
Man, do I long for the freewheeling days of 1933. Everyone was a high roller back then.
Just saying, when you're talking about percent change, where you start matters as much as where you end up.
@tgrwillki: It definitely feels like we've set a floor, I'd be happy to be on the better side of 0% in 2009.
@lostsynapse: My best guess: if the TARP and auto bailouts are properly administered, we'll have 1) a nice little bear market rally until February or March, followed by 2) another stock market "disaster" until the summer, followed by 3) a return to stock market normalcy {the usual 10% increase or so per year} followed by 4) the global economy starting to recover around the beginning of 2010.
I just made all that up. If it doesn't happen everyone will forget I wrote it. If it does happen, I'm buying myself a Nostradamus T shirt and coming back to brag on a daily basis.
@banmojo: The flip side to this argument is that if you do feel there is an financial Armageddon, you should be in commodities like gold and silver... so the argument that we should invest because the alternative makes money useless isn't really valid.
@unpolloloco: That's definitely a glass half full look, to call 50% drops a "fluctuation." :) I think the market will recover but to call it a fluctuation is a bit of an understatement...
I do believe that fortunes are made in bear markets, when people are flipping out, though... so we're in agreement.
@lpranal: Here is my addition to this thread.
Just how much of the "Greenhouse Effect" is caused by human activity?: It is about 0.28%, if water vapor is taken into account-- about 5.53%, if not.
Source: [www.geocraft.com]
Prediction: Dow at 6000 within 6 months. DOWn, baby, DOWn!
@LiquidGravity: I'm not 100% sure I want to trust an article on global warming written by someone who works for the West Virginia Office of Miner's Safety. Seems a little bit too close to the coal mining industry. [adamant.typepad.com]
I think it looks like the Burj Dubai ... which is coincidental as that's where all our money is going!
@redclear55: S&P long term Avg return rate is like 7-8% so yes it makes sense that 0-10% is the MODE
Sexy graph?
so... this graph arouses you? Stirs tingly feelings in your nether regions?
@lpranal: And I'm not a 100% sure I want to trust global warming "facts" from groups who stated purposes are to bring down the US economy because "we have to much and everybody else has so little" version of socialism. Hence the comments by Joe Biden about clean coal, "China can have it just not here". And alot of scientific groups my be saying that yes there is a warming trend, but man is hardly the cause of it.
@jdmba: Really, your using this thread to trot out the global warming denier spiel?
"alarmists" now code for "understands basic science" or "isn't a Big Coal employee". Good to know.
@booksy: Please show me sources saying that all these "groups" (i guess independent scientists don't count?) have ever stated that as a goal. There have been thousands upon thousands of studies, and assuming that they're all in cahoots as part of a vast conspiracy to undermine the US economy, DESPITE the fact that they're calling for GLOBAL reductions in carbon, is refuckingdiculous.
"may be saying there is a warming trend" is like saying you may experience a warming effect caused by walking into the sahara.
"but man is hardly the cause of it" again, stick to the facts. You didn't qualify the statement at all.
@Blueprint for Financial Prosperity: I don't think we'll see it get back to the levels it was at in the beginning of the year until 2020. We shaved off a portion of our economy that wasn't really there. What we're seeing now is a return to normalcy, that we don't produce anything and that we need to drastically change how our country does business.
@unpolloloco: A couple of years ago, everyone was talking about how everything will be going up forever!
Now everyone's saying that we're in for a huge depression and stocks won't recover until 2020.
As usual, the psychology behind the market is utterly manic-depressive. Yes, we're going to have our ups and downs, and yes, some of those ups will be huge and some of the downs will be too.
The point to take from the chart is that there are a lot more up years than down years historically, and there's no reason to expect that life is going to suck forever (just like there's no reason to expect that stocks will always keep rising forever).
Invest for the long term, following all the usual advice (higher risk/return when you're young, more conservative investments when you're old) and you'll do fine.
@cecilpl: 2008 & 1931, the worst. Years. Ever, are both GOP. The next worst is FDR, dealing with Hoover's policies. 2004, 1974 & 1930, also Republican.
I see a pattern too... Want to keep playing? :D
@Corydon: I don't know if you were trying to reference me or not, I was just saying that I don't think we'll see the numerical levels (Dow @ 14000+) until 2020. The stock market didn't see 1929 levels again until the mid-1950s or later, if I recall correctly. That doesn't mean we'll be in a depression, it just means that our economy will be normalized for what we generate.
Honestly, this whole crisis has been revolving around over-valued things--houses, mortgages, investments, businesses, etc.
@cecilpl: Oh, heh. Didn't notice the link. That's pretty damn awesome that you did that. Really. Thanks!
I'd argue (happy to admit this might be arbitrary, but I'd still argue) that there has to be some demarcation between the Modern Era (post-'20s?), since both Dems & Republican parties share basically only their name now and before some arbitrary point in our recent past.
Excellent work, tho. Thanks again!
@cecilpl: Damn cecilpl! You beat me to it! Here's the same thing in spreadsheet form.
I'd take it with a grain of salt. Both the Democrats and the Republicans have changed considerably over the years, especially since the 19th century, so past performance is not indicative of future results.
I will draw a couple of conclusions: those Whig bast*rds weren't all that bad, but I'd steer clear of van Buran and the Democratic-Republicans in the future!
@jdmba: so by saying that I'm assuming that you think that global warming exists (BTW Its really termed global climate change...NOT global warming), just not something for an average person to go nuts about.
My .02: most of the scientists that are connected to atmosphere, climate and other say global climate change exists and humans are a major cause of it. All of the scientists that are outspoken about disagreeing with it have questionable backgrounds in terms of funding, education and specialization. (Just because you're a podiatrist (M.D) does not mean that I should listen to you about signal processing).
@lpranal: Here is this a better source for you?
[yosemite.epa.gov] Page 5
Water Vapor (H2O). Overall, the most
abundant and dominant greenhouse gas in the
atmosphere is water vapor. Water vapor is
neither long-lived nor well mixed in the
atmosphere, varying spatially from 0 to 2
percent (IPCC 1996). In addition, atmospheric
water can exist in several physical states
including gaseous, liquid, and solid. Human
activities are not believed to directly affect the
average global concentration of water vapor;
however, the radiative forcing produced by the
increased concentrations of other greenhouse
gases may indirectly affect the hydrologic cycle.
A warmer atmosphere has an increased water
holding capacity; yet, increased concentrations
of water vapor affects the formation of clouds,
which can both absorb and reflect solar and
terrestrial radiation. Aircraft contrails, which
consist of water vapor and other aircraft
emittants, are similar to clouds in their radiative
forcing effects (IPCC 1999)."
@LiquidGravity: not really. It's not saying global warming isn't caused by humans, it's just not caused by humans through water vapor.
Also that report was published 8 years ago, and 8 years of research has made most of those findings obsolete.
Just give a rest, dude.
Well, we have ourselves a normal distribution. I wonder what all the "global warming" alarmists would say to a similar chart showing the temperatures.