Michael's Blog

Market Freefall

I originally posted about this back in October when this whole crisis started but as with all things econ there is a time lag between cause and effect. I have stated many times that I expect the DJIA to return to around the 5000 level and now many economists expect it to go even lower than that.

I'm not trying to spread gloom and no matter what happens I think we'll survive, humanity has made it through far worse times. One things for sure, the days of zero down, interest only loans are OVER.

Here's the latest graph I've made reflecting recent closing values.

Pop

That sound you hear on Wall Street is the bubble popping. I've been doing some more research on the economy lately and if my calculations are right we're in for a long ride. The last bear market lasted for 20 years but the Dow wasn't quite as inflated back then, this time things could be a lot worse.

Here's a graph to illustrate my point.

Download the Excel file.

Fuel Prices

I've been studying economics lately since I'm a stats freak and I find the economy really interesting, I also like to plan things financially so it's nice to spot where trends are going. Here's a chart of diesel prices over the last 5 years, adjusted for inflation. I already had the price data in my database so all I had to add was a table for the consumer price index and create a view to display the new data. The values are in 1982 dollars, to convert to current values just multiply them by 2.13 which is the CPI for March 2008.

Diesel Prices - Inflation Adjusted: