Braunie at The Market Guardian compares the 1929 crash to this crash.
Today vs 1929
This market has fallen farther and faster than 1929 crash. The New York Times points out that the S&P 500 is down 56% since it peaked on Oct. 9, 2007, 513 calendar days ago. In the identical number of days from the 1929 market peak, the market was down 49%. So we have fallen farther, faster in this market crash than the mother of all crashes. Following the 1929 crash, the Dow finally bottomed out in 1932 after a 90% slide.
The burning question is the fundamental soundness of current price levels. I refer you to Leonhardt’s excellent columns.
P/E is now 14, after falling from its bubble-highs. Leonhardt points out that in past crashes it hit 7 or so. Stocks have another 50% to go. (P is stock price, E is 10 year trailing earnings). 14 is a normal P/E, but not a bargain level, particularly in a recession. So far the crash has brought us back to normal, nothing more. A 4000 Dow might just happen.
This may be a particularly ugly crash simply because stocks were more overpriced.
Here is a link to a great NY Times Article.
