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- 1. February 9, 2011 CONFIDENTIAL Investing in a Post Crash Economy Slides for the Wealth Management/Investment Bank Conference call Barry Ritholtz, CEO Fusion IQ 1
- 2. 10 Steps to a Financial Crisis Source: Bailout Nation
- 3. Time Until Full Employment Recovery Post-Recession Economists are looking at the wrong data set: Instead of “ALL CYCLICAL RECESSIONS, try substituting CREDIT CRISIS RECESSIONS. Hence, why they seem to be perplexed by weak job creation and soft GDP. Source: Ritholtz.com, Calculated Risk
- 4. “100-Year Floods” seems to come along far more often than their name implies Source: Ritholtz.com, TheChartstore.com
- 5. 100 Years of Secular Markets, P/E Expansion & Contraction Source: Ritholtz.com, Crestmont Research
- 7. 1966-82 Cyclical Markets Source: Ritholtz.com, Bloomberg
- 8. S&P500: 2009-10 Compared to 1973-74 Source: Ritholtz.com, TheChartstore.com
- 9. Composite 19 Secular Bear Markets Source: Ritholtz.com, Morgan Stanley Europe
- 10. Duration and Intensity of Bear Market Rallies Rally averages over 12 and 24 months, going back to 1929 After 12 months, returns range from 21.4% (1987) to 121.4% (1932), followed by 81.4% (1935). Remove the post-depression outliers, and 1982 becomes the next most intense move at 58.3%. That is, until the 2009 rally. After 12 months, it stood at 68.6%. The average of these rallies at the 1 year mark was 47.3%. From one to two years, the rallies strengthened to 56.1%. Note that the two post-depression rallies eventually give up all their gains. (See S&P 90, lower right) 2009 is now the outlier. After just 23 months, this market is up nearly 100%. 1974 is the runner up at 65.7%. How intense is this rally? The current run is 50% greater than the next S&P 90 Roundtrips: closest one, and nearly 2X the 2 year average. 1932 ~~~ Bottom June 4th 1932 $4.21 Peak September 10 1923 $9.49 Low March 4, 1933 $5.47 How much of this is attributable to the Fed? We can only guess, but if only half of the excess gains over prior rally averages are attributable Peak July 22 1933 $12.44 to the Fed, it means that the US Central Bank has artificially created several trillion dollars in market capitalization. 1935 Bottom March 23 1935 $8.02 Peak March 13 1937 $18.84 Low April 2 1938 $8.36 Source: Ritholtz.com, Investech Research
- 11. War & Peace + Inflation + Secular Bull = 500% Gains Source: Ritholtz.com, Stock Trader’s Almanac
- 12. Recession Bear Market vs. Armageddon Source: Ritholtz.com, Bloomberg
- 13. Looking Backwards: Downsizing America Source: Ritholtz.com, February 2009
- 14. for more information, contact Barry L. Ritholtz CEO, Director of Equity Research Fusion IQ 535 Fifth Avenue New York, NY 10017 212-661-2022 516-669-0369 britholtz@FusionInvest.com The Big Picture http://www.ritholtz.com/blog