The chart that’s scaring Wall Street Opinion: I
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The chart that’s scaring Wall Street
Opinion: It’s not the late 1920s redux. Don’t panic, the analysis is flawed
In recent days, a chart featuring two lines like the ones shown below has been circulating among trading desks, according to hedge-fund manager Douglas Kass. It certainly looks scary, pointing as it does to a 1929-magnitude crash in January.
But there isn’t any need to run for the hills just yet. The chart’s statistical validity is questionable, at best. Even many of those who insist it is worth paying attention to aren’t predicting a crash.
The chart shows the performance of the stock market over the past 18 months alongside the path the Dow Jones Industrial Average (DJI
JIA) traveled in 1928 and 1929. In emailing it to his clients, Kass, president of Seabreeze Partners Management Inc., called the similarity “eerie.” http://www.marketwatch.com/story/the-chart-th...2013-12-06
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