The stock market's 1930s-style behavior

I'm not sure how important a metric "post-crash" volatility really is -- when the S&P was at 1200 at the end of september, 5% meant 60 points. With the S&P at 800, 5% is only 40 points.

Instability and uncertainty about actual asset values are a given in a post-crash market, and until things settle out large percentage changes are to be expected, and since those percentage changes represent on 65-70% of the dollar value they represented less than three months ago, "percentage change" metric is not exactly a consistent metric.

PARTY LIKE ITS 1929
(melody 1999, Prince)
The artist: WilliamBanzai7

I was dreamin' when I wrote this
Forgive me if it goes astray
But when I woke up this mornin'
Coulda sworn it was Wall Street judgment day
The S&P was purple and the DOW was gray,
There were traders runnin' everywhere
Tryin' to run from the destruction,
U know I didn't even care

CHORUS
say say Dow heads down to zero Wall Street party over,
oops out of time
So tonight I'm gonna party like it's 1929

I was dreamin' when I wrote this
So sue me if I go to fast
But Wall Street is just a party, and parties weren't meant to last
Paper losses is all around us, my mind says prepare to fight
So if I gotta die I'm gonna watch Cramer tonight

CHORUS
say say Dow heads down to zero--Wall Street party over,
oops out of time
So tonight I'm gonna party like it's 1929

intro 2x
Lemme tell ya somethin'
If U didn't come to party,
don't bother knockin' on Paulsons's bailout door
It's burning a hole in his pocket,
and baby he's ready to ask for more
Yeah, everybody's got an unhedged bomb,
we could all die any day
But before I'll let that happen,
I'll dance my irrationally exuberant life away

Oh, they say
say bloated leverage party over,
oops out of time
So tonight I'm gonna party like it's 1929
say say DOW heads down to zero party over,
oops out of time
So tonight I'm gonna party like it's 1929

we gonna, oww

1929
Dont ya wanna go 1929
Dont ya wanna go 1929
Dont ya wanna go 1929

"Not quite as uncertain as 1932, when it really seemed as if capitalism might be done for. But closer than anything we've seen since the 1930s."

I agree that in the 30s the movement had a world coming to the end aspect to it. This time, I'm wondering if the kind of trading that we do has an effect on the swings. In other words, even in this environment, people are doing a lot of trading, trying to feel a bottom and so on.

Also, as you say, government policy has been all over the place, effecting bonds, CDOs, mortgage rates, etc. I feel that people are assuming a bottom of about 7000 at worst, although it could go lower, of course.

The bottom line is, and I'm sensing that you agree, that there's a lot of volatility, but it's not that the system is going to collapse, but that, after a bubble, everybody's trying to get a feeling for where fairly valued might be. But that's a whole different world than the 30s, Thank God, in many ways.

True, the one-day moves aren't anything like we saw during the 30s fiasco. Of course, if you compared the BEGINNING of today's situation with the BEGINNING of the 30s thing, then the comparison changes completely. (Still no conclusions to draw, but it makes it interesting.)

Then you have an initial >5% swing of only 13 (in 1928) or 10 (in 1930) days in the 30s and a whopping 17 days in today's crisis. Which really just leaves us back where we started (knowing nothing about the future of the market).

I tend to enjoy looking at long term trends. In the DJI since 1928 you can draw a line through the approximate trend that the market has taken, and you'll see periods of "expansion" followed by periods of "flat lining" where the market stays relatively the same while it corrects. I'll predict the current crisis will send the DJI down to between $4500 and $5500 during the next 52 weeks, and it'll hover around that mark for roughly 22 years before the next expansion occurs.

@banzai, your ability to re-create songs never ceases to amaze me.

MELE KALKIMAKA WALL STREET
(Mele Kalikimaka, Bing Crosby Christmas)
WilliamBanzai7

SECURITIZED ASSET MARKDOWNs is one way say no bonus will be paid for Christmas 2008
That's the shareholder greeting to be sent to them from the land where no dividends are paid
Here we know that losses are obscenely high
If you think you are underpaid then go take a hike
SECURITIZED ASSET MARKDOWNS is the shareholder way to say no Merry Christmas bonus for you

The Andrew Sisters:
Mele Kalikimaka is the thing to say on a bright Hawian Christmas day
That's the island greeting that we send to you from the land where palm trees sway
Here we know that Christmas will be green and bright
The sun to shine by day and all the stars at night
Mele Kalikimaka is Hawaii's way to say Merry Christmas to you

The Andrew Sister's, Andrew Cuomo and Bing Crosby:
There they know that LOSSES are OBSCENELY HIGH
If they think they're underpaid then they should go take a hike
Mele Kalikimaka is the perfect way to say NO CHRISTMAS BONUS FOR YOU

Mele Kalikimaka is what we all should say to WALL STREET BANKERS WHO WANT A YEAR END BONUS PAID
Thats the perfect message to be sent to them in the land where bailouts saved the day
Here we know that LOSSES HAVE BEEN OBSCENELY HIGH
LETS TELL ALL THEM BANKERS TO KISS US WHERE THE SUN DON'T SHINE
Mele Kalikimaka is the perfect way to say no Christmas Bonus
no very Merry Christmas Bonus , no very, very, merry, merry Christmas Bonus for youuuuuuuuuu