Several posts have been written addressing this exact same question by many bloggers. The point of this post is not just to propose yet another speculation, but instead to emphasize an alternative question which is somewhat more important and practical from the investor point of view.
Based on the above graph, you then churn out your own approach and make a speculation.
Here are some example guesses:
- Optimistic Guess: The current recession is certainly not as bad as not as bad as great depression. Other recessions have resulted in roughly 50% drop in stock market. We already have seen this. Thus we do not have a long way to go.Maybe mid 2009?
- Popular Guess: The current recession is somewhere between great depression and other recessions. Looking at the above graph, we are roughly half-way. Perhaps the current recession will last into late 2010.
- Pessimistic Guess: The current recession will be nasty, result in decade long depression.
- Oil price in the range of $90-$100 (in case of further production cuts one has to adjust this price accordingly)
- A consistent steady improvement in industrail output. (As an investor you have to learn the discipline of regularly watching the data on industrial output, especially in times of recession)
- A steady at least 3-4 month improvement in housing prices- or alternatively an emergence of a V-shape in housing price graph. I recommend viewers to keep visiting Calculated Risk for housing news especially for housing prices in US.
this post was included in Carnival of Personal Finance 189.