I am strangely intrigued by the following visual on the levels of various stock markets over time. Courtesy of Visual Economics:
A few things that I notice:
- Am I the only one who thinks it’s odd that the graph shows the level of the Dow Jones Industrial Average versus the level of the overall stock exchanges in other countries? There was a lot going on on the NYSE and NASDAQ that wouldn’t be very much reflected in the level of the DJIA, since the latter consists of established blue-chip rather than growth stocks.
- As related to the above point, it’s really hard to see this dot com bubble that I am pretty sure burst spectacularly back in 2001 or so.
- Never underestimate the power of substitutes: If you look at the market reactions immediately after 9/11, you can see that, except for Japan, all of the other markets actually saw an upswing rather than a downturn. I suppose capital has got to go somewhere, and if investors are worried about a bomb hitting the floor of the New York Stock Exchange or whatever, they’re going to find alternative places to put their money (other than under their mattresses).
- Given the above, it’s curious that the London market seems to have been hit worse by 9/11 than the US market.
- If you ever start to doubt the ridiculous level of interconnection that markets have, notice that people’s stupidity regarding mortgages in the US seems to have dragged the rest of the world down with them. Luckily, things seem to be rebounding to a degree.
- Until the mortgage debacle, Shangai and Bombay were really on a tear…perhaps the banking crisis was fabricated to keep them from catching up? 🙂
- What’s up with Japan? Call me crazy, but the Nikkei seems to be a lot more random than the rest of them…