Mr. Market is often a great rapper, capable of spitting rhymes with the best of them. The first chart is a comparison of the 1974 low (top) vs the 2009 low to present (bottom). The second chart compares the 1994 break (top) vs the break last summer to present (bottom).
[Sorry for the low quality graphics but I didn’t have time to work out an elegant way to do it.]
Like every great rapper Mr. Market knows better than to keep repeating himself until you know what’s coming next, but similarities like these can still help tweak risk-reward estimates and prune decision trees. Personally, my “return of the ’70’s” thesis has held up pretty well for a decade, there’s no new Paul Volcker in sight, and frankly the 1994 comparison rhymes about as well as Ja Rule, so I’m leaning toward hitting the snooze button for a few years.