Continued from...Major Market Swings.
Primary MovementsIt will be well to give here the major swings from the time Dow wrote to the end of the bear market which culminated in 1921. They are as follows:
If the late J. Pierpont Morgan said that he was "a bull on the united States," this exhibit confirms his judgment. In that period of twenty-three years the bull markets lasted rather less than twice as long as the bear markets. The average duration of seven major bull swings is twenty-five months; while the average duration of seven major bear swings is fifteen months.
It will be noted from the table that the longest
major swing upward was that from September 22, 1903, to January 5, 1907.
The actual top of the averages was January 22, 1906, with it subsequent
irregular decline of some months and a like irregular recovery, all within
the year 1906,
to a figure close to the old high point. This is
therefore taken as the end of that primary movement, although the secondary
swing of 1906 was by far the most extended of which we have any record.
This exceptional year, of which the San Francisco earthquake was the feature,
will be fully discussed in a subsequent chapter. The other five bull markets
show periods of from something over nineteen months to a few days less
than twenty-seven months.
Startling PredictionsThe longest of the six bear markets here illustrated extended to nearly twenty-seven months, including the outbreak of the Great War and the hundred days' closing of the Stock Exchange, culminating immediately before Christmas, 1914. That was a black Christmas, as some of us may happen to remember; but it was followed, in 1915, by the tremendous boom in the production of material for the combatants in a war which America had not then entered - a boom which the stock market predicted with the greatest accuracy at a time when the business of the country was hardly beginning to grasp its significance.
Two of these six bear markets did not last quite a year, one of them less than a month more, and one of them less than fifteen months. There seems sufficient material here to say that a bear market is normally appreciably shorter than a bull market; perhaps as secondary downward swings in a primary rising average are short and sharp, with a halting recovery consuming a longer time than the decline.
From The Stock Market Barometer by William P. Hamilton, published in 1922
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