I'm mesmerized by the selloff, because it seems like there is no "reason" for it, just as there was no "reason" for the bubble. I don't think there is a significant relationship between GNP and market cap.
Something really terrible happened in 1929. Real GDP declined 12% in 1930, 16% in 1931, 23% in 1932, 4% in 1933, and then it started back up. We have only a decline in the GDP a few times since then - down 6% in 1938, down .3% in 1943, and down .7% in 1949. Even during the oil shocks in the 1970's, real GDP was growing at a rate of 6% up to 13%.
GDP growth is slowing, but as of last quarter 2000 it isn't negative, yet. |
