Thursday, November 8, 2012

Stock Market Risk


Click to enlarge.

Feeling lucky?

Source Data:
St. Louis Fed: Custom Chart

3 comments:

Stagflationary Mark said...

Just to be clear...

1. I'm adjusting the index for inflation.

2. The chart does not include dividends.

3. The 4 red diamonds on the chart define the exponential trend channel.

Jazzbumpa said...

Playing with this graph a little bit I notice that
1) not multiplying by 231.4o7 changes the numbers on the vertical scale but does nothing to the shape of the curve, and
2) Putting it on a log scale makes it look as if a linear trend channel will contain the data. (Not too surprising, if you think about it.)

I'll have to download the data and dig in a bit more.

Cheers!
JzB

Stagflationary Mark said...

Jazzbumpa,

Putting it on a log scale makes it look as if a linear trend channel will contain the data. (Not too surprising, if you think about it.)

It does. In fact, that's how I have charted it in the past.

August 8, 2011
Stock Market Risk Analysis v.2

I just thought I'd mix it up a bit this time. It is unclear what the true upper end of the channel should be. In other words, how bubbly were the bubbles?

As a long-term permabear who thinks our economy cannot possibly grow like it once did (for a variety of reasons, among them the fact that women can no longer enter the workforce like they once did and the fact that we cannot endlessly take on exponentially increasing inflation adjusted debt), I'm also extremely skeptical that we can stay in the upper half of the long-term channel.