Just for fun, we've adapted one of our analytical methods for forecasting stock prices and applied it to the stock market of the Roaring Twenties, which really ran from October 1925 up through September 1929:
Keeping with our yesteryear analysis by taking only what someone in the 1920s might have known about our statistical control chart-inspired analytical methods into account (statistical control charts were invented by Walter Shewhart in the 1920s, it would still be years before Western Electric's rules for detecting breaks in trends would be well developed), the value of the S&P 500, or really, its predecessor index, in September 1929 would mark a very strong sell signal, indicating that stock prices were no longer "normal", while also being far above the mean.
What followed next in October 1929 is, as they say, history!...
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.
Today, at 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for September 19th, 2014 | John Ransom
In Other News: Bi-Partisan Agreement that Debbie Wasserman Schultz is a Horrible Person | Michael Schaus
In Other News: State Department Covers Up for Hillary – Asks IRS How to Destroy Hard-Drives | Michael Schaus