Two intriguing observations from this data (Compiled by Dustin Woodard)

Stock market crashes can last more more than a year.

September or November are the critical months (remember October 1987).

10th Worst Stock Market Crash:
Date Started: 1/15/2000
Date Ended: 10/9/2002

Total Days: 999
Starting DJIA: 11,792.98
Ending DJIA: 7,286.27
Total Loss: -37.8%

9th Worst Stock Market Crash:
Date Started: 11/21/1916
Date Ended: 12/19/1917

Total Days: 393
Starting DJIA: 110.15
Ending DJIA: 65.95
Total Loss: -40.1%

8th Worst Stock Market Crash:
Date Started: 9/12/1939
Date Ended: 4/28/1942

Total Days: 959
Starting DJIA: 155.92
Ending DJIA: 92.92
Total Loss: -40.4%

7th Worst Stock Market Crash:
Date Started: 1/11/1973
Date Ended: 12/06/1974

Total Days: 694
Starting DJIA: 1051.70
Ending DJIA: 577.60
Total Loss: -45.1%

6th Worst Stock Market Crash:
Date Started: 6/17/1901
Date Ended: 11/9/1903

Total Days: 875
Starting DJIA: 57.33
Ending DJIA: 30.88
Total Loss: -46.1%

The 5th worst stock market crash:
Date Started: 11/3/1919
Date Ended: 8/24/1921

Total Days: 660
Starting DJIA: 119.62
Ending DJIA: 63.9
Total Loss: -46.6%

4th Worst Stock Market Crash:
Date Started: 9/3/1929
Date Ended: 11/13/1929

Total Days: 71
Starting DJIA: 381.17
Ending DJIA: 198.69
Total Loss: -47.9%

3rd Worst Stock Market Crash:
Date Started: 1/19/1906
Date Ended: 11/15/1907

Total Days: 665
Starting DJIA: 75.45
Ending DJIA: 38.83
Total Loss: -48.5%

2nd Worst Stock Market Crash:
Date Started: 3/10/1937
Date Ended: 3/31/1938

Total Days: 386
Starting DJIA: 194.40
Ending DJIA: 98.95
Total Loss: -49.1%

Worst Stock Market Crash Ever:
Date Started: 4/17/1930
Date Ended: 7/8/1932

Total Days: 813
Starting DJIA: 294.07
Ending DJIA: 41.22
Total Loss: -86.0%

NOTE: This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts. For more information, including a prospectus with charges and expenses, call the number of any brokerage firm, mutual fund company, investment advisor, or insurance company.. Please read the prospectus carefully before investing. . Mutual fund investing involves risk, including the possible loss of principal. In addition to the normal risks associated with equity investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments typically exhibit higher volatility. Products of companies in which technology funds invest may be subject to severe competition and rapid obsolescence. Index performance returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index. Past performance does not guarantee future results. Ethos provides this news page for information purposes only and it should not be construed as legal, accounting, tax, or professional advice. Ethos Advisory Services disclaims any loss or liability which is incurred as a consequence, directly or indirectly, of the use or application of this news page or any page on ethosadvisory.com or echievements.com.

Psalm 58
A David Psalm
1-2 Is this any way to run a country? Is there an honest politician in the house?
Behind the scenes you brew cauldrons of evil,
behind closed doors you make deals with demons…

6-9 God, smash their teeth to bits,
leave them toothless tigers.
Let their lives be buckets of water spilled,
all that’s left, a damp stain in the sand.
Let them be trampled grass
worn smooth by the traffic.
Let them dissolve into snail slime,
be a miscarried fetus that never sees sunlight.
Before what they cook up is half-done, God,
throw it out with the garbage!

Scripture taken from The Message. Copyright � 1993, 1994, 1995, 1996, 2000, 2001, 2002. Used by permission of NavPress Publishing Group.

In simple terms greed and fear drive markets. These broad generalizations provide easy categories for market events. Makes us quite dextrous when finger-pointing too. We can accuse while we recuse.

Maybe stock market crashes are not so simple-minded. Perhaps more complexity is involved especially when politicians stage their agenda.

Yesterday, I began wondering what reasons any legislator (Federal or State) might overlook sub prime transactions. Truck drivers heading down hinterland highways, llama farmers in Wisconsin, and the homeless sleeping on park benches on the New Haven Green knew about sub-prime mortgages.

Seems reasonable to think that the dinner conversation at the 701 Restaurant on Pennsylvannia Avenue where (according to the Washington Times), the menu delights include “an amuse bouche… finished with chocolate pave or rhubarb-and-strawberry compote surrounding a small almond cake” (just what we regular folk eat every day).

Between the delicate morsels (at tax payer expense), what did these folks discuss? Somebody must have noticed the economic fiasco on the horizon. Or, was there another agenda?

Is it likely that overlooking subprime transactions was part of a social agenda? Was there hope that permitting a disenfranchised class to own the “American dream” (even though unqualified) could change the social-cultural, and political structure of America? If they were having that conversation at McDonald’s or sitting on the Capital lawn with lunch bags, I might think so.

Housing does franchise the American dream; a family living in Lawrence, MA wants that dream as much as the family living in Manchester, MA. One family wins the social and economic lottery while the other suffers the fate of limited means.

If there were more Habitat For Humanity homes, and if more volunteers from places like Manchester, MA headed to Lawrence, MA, the desires of many would be met. The fulfillment of a dream would be kept. Of course, there’s one major rub. You don’t make big bucks building Habitat homes. The bank doesn’t earn a cent from the mortgage, and the homeowner just pays back the principle with a “sweat-equity” commitment. Not much of an economic incentive there; so greed prevails as the antagonist of hope.

For a more complex opinion, read “The Greed Fallacy” by Arthur MacEwan (Dollars & Sense, the magazine of economic justice).

Never have I observed such a dispirit mass of views, political dysfunction, and public confusion. Dispirit views can be expected whenever discussion ocurrs, but political dysfunction is not what a democracy needs. Public confusion erupts because there is a lack of government leadership and public knowledge. When a crisis arrives, no one can decide on what works, and no one leads. All parties appear to play the zero-sum game: give me all I want and I’ll give you nothing of what you want, or I’ll give up something as long as you know there’s hell-to-pay.

Most people get their stock market updates from the evening news. The excitement on the way up with the gloom and doom during a market correction. Very few get much of an education. Duncan Niederauer, CEO of the New York Stock Exchange recognized this by statiing that many voters fail to understand the inextricable link between “Main Street and Wall Street”.

American voters think this is a “bailout of Wall Street”. What we face is a “credit-crisis”. Small businesses faces payroll challenges, the U.S. auto industry has no wheels, and the housing industry has no foundation. As Secretary Paulson said, “…this is much too important to let this fail,” Paulson said.

House Majority Leader Steny Hoyer said, “Why should taxpayers loan out their own money to solve a crisis brought on by someone else’s greed?” He answered his own question by saying, “…in our economy, none of us is an island. A meltdown would begin…on a few square miles of Manhattan, but before it was over…no city or town in America would be untouched.”

Mutual fund, 401(k), endowment fund, and pension investors can blame Wall Street “fat cats”, but we all chased the mice. We all gloated and took pride in the numbers on our statements. “No city or town in America” ran from the market upside, but everyone wants to blame someone on the downside.

The greater the excess or hubris, the greater the humiliation. The greater the cynicism, the greater the deliberative dysfunction when seeking a resolution. The greater the market avarice on both sides of a trade (long by owning stock and selling or shorting a stock)the worse the results for everyday, steady-hearted investors.

We can only hope that time and sensibility return our sanity. We can only hope that the stock market becomes a thermometer of economic growth, research and development, entrepreneural innovation, and a cooperative effort to keep this planet revolving for our kids.

A damaged market needs a “capitulation” phase followed by a “base-building” phase. Each phase defined by trading volume because trading volume confirms a trend. During “capitulation”, investors “cave-in” with dramatic selling, and significant way-above-average trading volume.

I wrote this a few weeks ago, and forgot to enter the thought. Maybe/maybe not, we have seen capitulation. Today’s U.S. market activity suggests that probability. Today’s (September 29, 2009) foreign market activity may validate this presumption.

Just turned-off Bloomberg Television (the only reason for a TV in my office). When watching the stock market, I go from Bloomberg Television to the Fox Business Channel (some former Bloomberg talking heads must have received attractive offers from the Fox Business Channel) when watching the stock market. Turning-off the TV brings a wave of quiet and rest to my head. Too many opinions along with a depressed stock market paralyzes my work (months ago, the TV was turned-off because of too much stock market euphoria).

Sometimes I open Firefox to Google “stock market news”. I look for positive information. Something encouraging and hopeful to counterpoint my disappointment in recent Fed action (or inaction), the price of oil per-barrel, Michigan Consumer Sentiment Index - MCSI, and today’s Dow Jones Industrial Average slippage to a 20% bear stock market drop.

Have I found positive, happy, sanguine news? Not really. I have found hints of optimism based on specific indicators. Investor’s Business Daily (IBD) is a favorite stock market source of information. IBD tracks the EKG (stock trading patterns), relative strength, earnings-per-share, industry rank with a lot of other data.

At Investors.com, IBD offers a stock market video reviewing the previous day’s stock market close. Anyone may listen, but the video changes daily. Ken Shreve’s stock market commentary provides helpful insights that may soothe you while watching stock market trades.

You will find Mr. Shreve’s stock market perceptions helpful. I do. Look for the “Daily Stock Analysis” at Investors.com. Remember, this is Mr. Shreve’s comment for one day. To understand stock market trends, you’ll have to listen daily. Also, my mentioning this resource is not a recommendation. You may not find IBD’s comments helpful or suitable to your investment goals. At worst, you may find his commentary and charts entertaining.

Want to learn something about correlation, also known as correlation coefficient? Conceptually, correlation appears simple and recognizable. When two asset classes trade simultaneously in the same direction, they are in positive correlation. When two asset classes trade simultaneously in opposite directions, they are in negative correlation.

Correlations between asset classes differ constantly. Somewhat like a marriage. You go to bed, and synchronicity is positive (what I’ll call positive correlation). In the morning you wake up asking what happened! You both simultaneously disagree on everything (What I’ll call negative correlation.)

During 2007 and 2008, the U.S. $ suffers burdens against nearly every currency. At the same time, oil costs per barrel increase (Important to point out that the cost-per-barrel is dollar denominated.). When looking at a chart, you will notice that when oil goes up the dollar goes down. When the dollar goes up, the price-per-barrel goes down. We call this negative correlation; in fact, just about perfect negative correlation and this explains the trades back and forth between the dollar and oil.

Your asset allocation model wants as many cross correlated asset classes as possible. When one is up, the other is down.

This week, two couples called me about their marriage, their money and their misery. Each couple faces self-humiliating emotions that distort their marriage, their money, and their self-fulfilling misery. What makes me say, “self-fulfilling misery”? Well most of us might agree that the burdens we experience are somewhat self-imposed. For the oddest of reasons what we don’t want to happen becomes what we want. We live upside-down when distracted by money.

How come they ask for help? Because they want someone to help them find a way to keep what they have without losing what they want. Is it possible? Of course! Every economic cycle offers an opportunity.

The goal of planning is not to disappoint, but to find, create, and inspire options. What will bring harmony to our lives, to our home, to our bank account?

No one should have to abandon dreams to live. We do not need to step down; we need to step up. Marriage delights husband and wife when money flows and misery ebbs. Spreadsheets tell us where the money goes now; imagination inspires money flow for our next-steps.

All seems like pie-in-the-sky. We can change what we choose. The world is not against us; the earth is made for us. Financial planning may mean a temporary adjustment, not a permanent disappointment. Hopeful energy instigates change, growth, and harmony, and this is what financial planning ought to achieve. A financial planners goal includes challenging a couple’s imagination, purpose, intention, and happiness.

Everything is all about money, but what could you do differently to bring a happy flow of cash to your lives? The answer keeps away the “misery” while bringing passion to a marriage and money to a bank account.

Want some assurance that this truth deserves your attention? Read “The Science of Getting Rich” by Wallace Wattles.

Some older friends told me about phone service in our community. You’d crank-up Mary, the phone operator. You’d say, “Mary, connect me to my Mom and Dad.” While waiting, Mary would bring you up-to-date on what’s happening in Town. Nothing like, “Jay’s horse got loose yesterday.” No, this would be juicy stuff about so-and-so leaving someone’s house in the morning shadows.
Mary’s gossip created a buzz in Town, but she may have missed the facts. Presumably, financial news comes close to plain and clear reporting with a hint of speculative prognostication. We don’t want Mary’s journalistic methods informing us about the stock or bond markets.

Investor’s Business Daily, in my opinion, offers clear data supported by distinct technical data. William O’Neill learned by watching institutional investors (mutual funds, pension plans, and institutional private money managers). IBD applies that growing body of knowledge to current market events.

Trading volume may be one of the most important, but not the only important, market actions. Others worth considering:

• Trading patterns,
• Changing market leadership,
• Support and resistance lines
• Relative strength
• Earnings and sales momentum

One of my favorite resources is the “Daily Stock Analysis” video (about 1/3 of the way down the page). Watch it, and you’ll develop insights about how markets and individual stock market pricing changes.

Some times the stock market takes off like a rocket. Yesterday (March 18,2008) was one of those days. The Dow Jones Industrial Average closed with the 4th highest one day gain in the history of the index. I get excited when the market goes up like that. My tendency is to be optimistic, yesterday does not give me many reasons for a party.

You need a lot of people to make a stock market party. Yesterday everyone was invited, but only a few came. Stocks must move up on strong volume with confirmation over at least 6 to 10 days of market action (not necessarily in a row). Yesterday was not convincing because the trading volume was not there.

You can get a further sense of stock leaders by their trading volume too. If they show price gains without exceeding their average daily volume, you have an invitation, but not a party.

You can learn more about the market’s activity by listening to the daily audio report posted on the home page of the Investor’s Business Daily web site. You will learn some technical or chart pattern pointers, and get a sense of market direction, if this is important to you.

Most of us tolerate asset allocation portfolios better than individual stock portfolios. Knowing where the market is going gives you insight and confidence about your investments.