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Politics : Foreign Affairs Discussion Group

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To: mistermj who wrote (215192)	1/27/2007 9:31:16 PM
From: jttmab	Read Replies (2) of 281500

I'll remind you of an earlier comment on the chart to begin with. The comparison between the DOW [1929 crash] and NASDAQ [2000 crash] is bogus to begin with. The DOW wasn't the "new economy" of 1929 it was the industrials. A well established market. The NASDAQ has always been more volatile. And the "new economy" of the NASDAQ was shown to be BS. Even at it's worst the NASDAQ never crashed to the levels of the DOW in 1929 or for the same duration. The DOW lost 89% of it's value from the peak [380.33] to it's valley in 1932[42.84]. Between 2000 and 2003, the NASDAQ had a high of 5048 and a low of 1139 a 77% drop. Significantly, better than the 89% drop. Further, you make no consideration of 9/11/2001 as if it's a non-event for the markets. Just pretend the 2000-2003 was all about the "new economy". At least for today. Maybe tomorrow, when you're talking about terrorism, you'll point again to the crash of 2000-2003 and it's the terrorist's fault. Now let's return to the DOW, if you were going to do the proper comparison, you would have compared the 1929 DOW crash to the 2000 DOW crash. That's comparing apples to apples. From 1929 it took the DOW until 1954 to recover to it's pre-1929 levels; over 30 years. 6 years after the DOW crash of 2000, the DOW is at record levels. In general, most traders and charting programs use the logarithmic scale Most charting programs use both. I've never figured out why traders can't compute a %. Must be too hard to look at the column that says % gain/loss. You think the weather man is bad. I can turn on the weather report in the morning and get a pretty accurate prediction of the weather for that day. Financial analysts don't have any idea whether the market is going up or down that day. They wait until the market closes and then explain why it happened. The weather guy would love to apply that to his discipline...I'm not going to tell you the weather that's going to occur today, I'll wait until the end of the day and tell you why you had the weather you had. Is that a great job or what? A logarithmic chart, by it's construction flattens the curves thus visually hiding the proportional changes. In other words, the chart is a crock. It's a crock because it makes an apples to oranges comparison; it's a crock because the proportional drops were not the same; it's a crock because it doesn't account for the volatility of the NAS and the effects of 9/11. Other than that it's very good. jttmab

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