The stock market is poised for a 40% drop, warns economist who says the current climate feels a lot like 1929

MarketWatch/Shawn Langlois

“I think we’ve got a second leg down and that’s very much reminiscent of what happened in the 1930s where people appreciate the depth of this recession and the disruption and how long it’s going to take to recover. … Stocks are [behaving] very much like that rebound in 1929 where there is absolute conviction that the virus will be under control and that massive monetary and fiscal stimuli will reinvigorate the economy.” – A. Gary Schilling, economist – A. Gary Shilling & Co

USAGOLD note:  Schilling joins a group of prominent economists and market analysts who see similarities between the 1930s and the present. Schillings warning about a 40% drop prompts a quick review of the market action following the 1929 crash. The top (380) to bottom (43) decline occurred over a three year period from late1929 through most of 1932 and amounted to a more than 85% loss of index value. The Dow Jones Industrial Average did not return to its 1929 peak until late 1954 – 25 years after the Great Crash.

line chart showing stocks from 1929 to 1955Chart courtesy of MacroTrends.net


Repost from 7-7-2020

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