Just How Bad Is This Market Slump? Bad Enough To Make You Rich!

In StumblingUpon the internet, you’ll come across some interesting graphs and charts that really open your eyes to what has been happening.  How bad is this particular stock market slump? I’d say bad enough to make charts and graphs really jump out at you.  At the beginning of this blog’s existence back in the prehistoric times, I had been charting my monthly investment ups and downs.  Due to recent extenuating circumstances, I’ve slowed a bit on that passion.

Not only because it would only change a percentage point or 2 each month, and really only needs to be looked at about once a quarter or maybe a couple times a year if you’re planning for the long haul.  It takes some gandering, but not too much or you can get distracted by what’s happening to it, and ultimately your long-term goals with it.

That being said, I still will look at mine, but haven’t yet felt we’ve hit rock bottom, and at which time I’m going to show my downward spiral (as most everyone else has taken the same path, but actually have it documented to see just how bad it hit).  As of today, we’re looking at about a 35% drop across my board 401k, ROTH, Traditional for my long term accounts and that’s actually BETTER than some (worse than others), let me know yours in the comments.

The basis of this post was the following chart though I found on DailyKo here:

“On this chart each block represents a year and each column represents a range of return on the S&P index. Over on the right side are those lucky years where the index has soared upward from 50-60%. In the middle are the more typical years, where the market has risen less than 10%.

That little box on the far left?  Yeah, that’s this year.

The chart (the idea for which comes from a similar chart prepared by Value Square Asset Management, Yale University) has a wealth of interesting information. Because the S&P is a much broader index of market activity, it’s not quite as prone to crazy moves as the Dow. It’s also not as easily manipulated by the “let’s just trade out these exhausted brands for a couple of up and comers” means by which the Dow’s value is sometimes inflated.”

Obviously all charts can be skewed and setup to match the pattern that the chart maker wants you to see, but they’ve just displayed it in a way that points out things we already knew, in a format that we haven’t seen.  An interesting piece to note is the years right after The Great Depression – it’s gained some of the biggest numbers right afterwards.  We want to be in it right?  Well, you tell me when that magical year is going to be and we’ll chat.

During the Great Depression, we fell pretty consistently until Roosevelt’s New Deal in 1933 (and then dipped again in 1937), but take a look how that took about 4 years to dig ourselves out of it.  That’d put us somewhere around 2012 until we got back on our feet if past experiences are any indication of future results.

My fingers are crossed mainly that I keep my job, and if I do I can make create something out of all the deals that are going on in the economy.  Houses are at a discount, land is cheaper, businesses themselves are cheaper, gas is cheaper – heck, you can even get cars at 2-for-1 deals!

There is something out there that is ripe for the picking in times of financial strife, finding that niche is where you’ll make your best buck.  If you’ve got an idea to sell, I’m willing to listen as I’ve got a few bucks looking to find somewhere to put it.  Where are you looking to invest in the next 4 years?

Filed Under: 401K • advice • Mutual Funds • ROTH IRA