To: bearshark who wrote (40821 ) 2/20/2000 1:25:00 PM From: bearshark Read Replies (1) | Respond to
"From the September 1929 peak to the nadir of the Great Depression in the summer of 1932, the Dow industrial average dropped from 381 to 36, or just over 90 percent. From the December 1968 peak to the May 1970 bottom, the same index dropped from 985 to 631, or about 36 percent. By that standard, a pistol shot as against a mortar barrage. But, as we have had occasion to note before, that standard really will not do; the Dow accurately reflected the 1929--1932 market when house painters and office girls were making their plunges in Dow stocks like general Motors and Standard Oil of New Jersey, and woefully failed to reflect the 1969--1970 market when similar plunges were far more likely to be made in Control Data or Ling-Temco-Vought. A financial consultant named Max Shapiro, writing in the January 1971 issue of Dun's Review, tried to construct a new yardstick more appropriate to the new situation. As a rough modern counterpart to what the Dow represented in the old days, Shapiro made a list of thirty leading glamour stocks of the nineteen sixties--ten leading conglomerates including Litton, Gulf and Western, and Ling-Temco-Vought, ten computer stocks including I.B.M., Leasco, and Sperry Rand, and ten technology stocks including Polaroid, Xerox, and Fairchild Camera. The average 1969--1970 decline of the ten conglomerates, Shapiro found had been 86 percent; of the computer stocks, 80 percent; of the technology stocks, 77 percent. The average decline of all thirty stocks in this handmade neo-Dow had been 81 percent. Even allowing for the fact that the advantage of hindsight gave Shapiro the opportunity to choose for inclusion in his list particlular stocks would help prove his point, his analysis strongly suggests that, as measured by the performance of the stocks in which the novice investor was most likely to make his first plunges, the 1969--1970 crash was fully comparable to that of 1929." The Go-Go Years, John Brooks, 1973, Weybright and Talley, New York.
