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Markets Still in the Maw of the Bear


But each downward move brings us closer to bottom.


A great deal has been said in the media about the performance of stock markets in February. In the face of unrelentingly dismal economic reports, this article serves to put market movements around the globe in perspective.

After the worst January (-8.8%) on record, the Dow Jones Industrial Average closed February (-11.7%) in the third worst position, after 1933 (-15.6%) and 1920 (-12.5%). Also, the Dow's decline marked its sixth consecutive month in the red. Bespoke pointed out that losses during this period (-38.8%) were much larger than in any of the other seven losing streaks of 6 months or longer.

Factoring in yesterday's declines, the S&P 500 and Dow have now fallen to 10.9% and 7.7% below their respective 2002 lows, floundering around levels last seen in 1996. December 5, 1996 also marked Alan Greenspan's well-known Irrational Exuberance speech. The level of the S&P 500 on that day was 43 points higher than yesterday's closing index of 701! (Hat tip: Barry Ritholtz.)

Even more chilling is the fact that the Dow has wiped out more than half of its entire gain from the July 1932 low of 41 to the October 2007 peak of 14,164. It has taken just 16 months to lose more than half of the gains accumulated over 75 years!

Let's follow the unfolding drama by means of charts for the S&P 500 Index, the MSCI EAFF Index (representing Europe, Australasia and the Far East - the main benchmark for non-US stocks) and the MSCI Emerging Markets Index.

Zeroing in on the numbers, the performances in the table below are given in local currency terms for different measurement terms ended February 28.

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No positions in stocks mentioned.
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