Friday, October 14, 2011

Stepping back for perspective

One thing that irks me whenever I hear it is the announcement of Wall Street results on the radio. The performance of the market is always spoken with such a finality. Such a rushed and important manner. It is as if life and death depended upon every second, every point. Now to be fair, for those actively trading, every second, every movement is important. But let's remember why it is being mentioned? It is intended to generate more trades. Money is made by the very act of trading whether the prices go up or down.

Looking at the past three months, the gyrations of the market (as depicted by the Dow Industrial Average) are evident. You have heard of these swings as they happened. 200 up one day, 200 down the next. Quite a roller coaster ride!

Let's step back a little further. What does the chart look like for 6 months?

Wow, there was a significant drop and then the roller coaster ride! Let's go back a little further. What does it look like for 1 year?

Well look at that! A gradual increase marked by a couple of corrections before we get into this period of turbulence. What does 3 years look like?

Wow, a much more gradual increase with smaller corrections before getting into the current period of turbulence which by the way, is a good distance from the bottom of the recent market in 2008. And for a final step back, let's look at what 5 years shows us.

Putting the current period into perspective does give it a different picture. Yes, there is turbulence. The market can't seem to make up its mind but the level of the mark is well above the bottom found in 2008 and not to far off where it was in October 2006.

Note: I am not a market professional nor qualified to provide financial advice. These are purely my own observations and reflections to put the market activity into perspective for myself.

Note: all charts are screen captures from the Interactive Chart available on for the Dow Industrial Average (INDU) taken just after 6:00 AM on Oct 14, 2011. Got to for a current view of these charts.