Wednesday, July 18, 2012

Stock Market Risk


Click to enlarge.

One chart to rule them all, one chart to find them
One chart to bring them all, and in the darkness bind them

Source Data:
St. Louis Fed: Custom Chart
One Ring

5 comments:

Anonymous said...

Dont think this chart actually points out unreasonable growth which would suggest risk. You have to look at other changes that occured. Banking for example saw huge consolidation. The banks in this average were literally hundreds of banks just 20 years ago. Walmarts growth ocuured over the last 30 years and that probably represents what was once thousands of reatilers.

Stagflationary Mark said...

Anonymous,

Dont think this chart actually points out unreasonable growth which would suggest risk.

Perhaps this collection of exponential failure charts will help you see the risk?

Stagflationary Mark said...

The banks in this average were literally hundreds of banks just 20 years ago.

If bigger is safer, then explain Citigroup.

Mr Slippery said...

I was going to bring up inflation adjustment, but I see this chart is already adjusted. Ruh, roh.

That run from 1990 to 2000 was something special. It looks like even a Nobel winning PhD economist from LTCM could figure out a formula for that run. Too bad, it didn't work out and they blew up the company.

Stagflationary Mark said...

Mr Slippery,

Ruh, roh.

We were Scooby duped. ;)