Wikinvest Wire

Recessions and stock market bottoms

Tuesday, May 12, 2009

Here's an update to a table that appeared here a week or two ago that had the unfortunate error of citing September 2001 as the most recent stock market bottom.
IMAGE When corrected, the data circled in red above becomes an extreme outlier, bringing into question the reliability of the historical relationship between the end of recessions and lasting lows for equity markets.


Tim said...

From ndd, via email:

Tim, I tried to leave the following as a comment to your post about stock market vs. recession bottoms, but word verification is down, so comments won't post. Here it is:

Re the 2001 recession: it had apparently bottomed out by summer (we had +GDP growth) when 9/11 happened. The sudden decline for several months in economic activity was due almost entirely to that infamy.

It is the classic example of an exogenous event that, literally and indelibly, came out of the clear blue sky.

Not any reason to dump the metric.

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