On September 14, 2020, the S&P 500 Index closed at 3,383.54. To celebrate, we are going to review what Richard Russell’s Dow Theory Letters had to say about the market when the Dow Jones Industrial Average closed at 3,384.32 on August 4, 1992.
Russell said:
"...the nation's in a 'contained depression'."
"Interest rates have collapsed, consumers are gloomy, and nobody's taking out loans. That's exactly what happened during the Great Depression--with one big difference. Then the stock markets were crashing but today the markets are bullish. So how are the two periods different? As I interpret it, today's stock market is saying that somewhere ahead business is going to pick up and people will start buying again---unlike during the 1930s."
"for the first time since the Great Depression almost all the nations in the northern hemisphere are in various stages of a recession."
"...the widely publicized figure is that 40% of the 5,000 listed stocks have been downed by 30% or more. On that basis, some analysts are referring to 1992 as the 'year of the hidden bear market'..."
That was page one of six from the August 5, 1992 issue of Dow Theory Letters. Fascinating? History doesn’t need to repeat. However, good analysis starts with precedents first, as outlined by Charles H. Dow, and diverges afterward, not the other way around.
What was being said by other analysts is not too different from what we’re hearing today. We all know what has happened to the Dow since August 4, 1992.
