The graph is half full

March 31, 2009 in Finance

The Big Picture has a post which borrows two graphs from Credit Suisse that are meant to illustrate the performance of the S&P 500 in the 100 days following a "major trough."  I re-borrow them here:

It looks like the top graph represents a collection of bear market bottoms, which are easily identifiable by the characteristic manner in which the market stops going down after they occur. So congratulations, the graph and a healthy dose of common sense confirm: if you think we just saw the absolute bottom then it's all up from here!

In [slight] seriousness, the implied message appears to be that "the recent rally looks more like a post-bottom move than a post-something-other-than-a-bottom move."  Frankly, I think we've had enough of people trying to compare the current downturn to previous downturns and draw a meaningful conclusion from any perceived similarity. Even Madoff had it right there on his prospectus: past performance is not indicative of future returns.

via 100 Days from Major Troughs | The Big Picture.

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