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Post-Crash Rebound Accomplished

Bob Hoye
Institutional Advisors
Apr 22, 2009

  • Last years' forced liquidation of unsupportable speculative positions fit the Classic Fall Crash Model with outstanding fidelity. Thursday's Pivot had the table of key dates.
  • This included the rebound to April 17, 1930, which was accompanied by reports about the revival of speculation. Barron's coverage was vivid:
    "It is thus apparent that the public preference for stock is not only as marked as ever, but also the will to speculate is still a speculative factor not to be overlooked. The prompt return of huge speculation and the liberal manner in which current earnings are again being discounted indicate that it will be difficult to quench the fires of stock-market enthusiasm for long." -Barron's The Trader, March 24, 1930
  • Thursday's Pivot also included a current response from a fund manager who is the most bullish on "emerging market" equities "in a decade".
  • The rebound in stocks and commodities in the spring of 1930 inspired forecasts that the economy would be recovering by late in that year.
  • Until last week a similar view from the establishment has been missing.
    "The economy is still weak, but there are some encouraging signs that support cautious optimism. My outlook calls for the beginning of a early as the third quarter."
    -Atlanta Federal Reserve President Dennis Lockhart, Reuters, April 16, 2009
  • This compares to some comments made at the equivalent time in 1930:

    "Trustworthy economists believe that decided business improvement is inevitable by fall at the latest."

"Harvard Economic Society also looks for a vigorous third quarter in business." -Barron's, May 26, 1930


Action in stocks, corporate bonds, commodities as well as announcements from the establishment continue to track the typical post-bubble contraction path. The high for the Dow in 1929 was 381 and the rebound was to 297 on April 17, 1930. The low was 42 in July 1932.

There is no guarantee that this path will continue, but, then there is no guarantee that it won't.


Apr 20, 2009
Institutional Advisors

Hoye Archives

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