Indeks S&P 500

Will history repeat?

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The S&P 500 divided by M2 in 2020 looks a lot like the Dow Jones Industrial Average leading up to and months after the 1929 crash. Back then, the Fed was constrained to the gold standard and wasn't able to inflate the money supply as they do now. Adjusting for this difference might provide a better picture of the current state of the market.

After the 1929 crash, the Dow Jones Industrial Average recouped over 50% of its losses over the next 5 months (as you see in this chart) before restarting its historic slide for another 3 years, wiping out ~80% of its value.

Will history repeat? Honestly, no one has any idea, but it is interesting to look at the past to help makes sense of a potential future.

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