Aug

18

Recessions

August 18, 2020 |

 Ralph Vince writes: 

I went to look at past recessions beginning with the one that officially started in Aug '1929. I looked that the number of months, the recession officially lasted for what the highest teh unemployment rate got up to was, what the lowest GDP dropped during  it, and the drop in the DJIA. there were 14 official recessions in this period (Iam not counting the current recession we are in).Interestingly, the correlation between the depth of the unemployment  rate and the number of months the recessions lasted for was .8438. I  other words, the deeper the unemployment rate, the longer the recession lasted for to a very high correlation.

The depth ofGDP drop too was highly correlated to the months the recessoin lasted to a correlation of .75.Every recession saw  market drop-off of varrying degrees with the least being -5.727% from fb to october 1945, the worst -89.19% from  Aug 1929–Mar 1933 Of the 14 recessions, 10 saw market drops >20%, and 4 of those saw drops >45 %.

So I would expect this recession to last a long tim based on unemployment and GDP so-far. However, even though all recessions saw a market drop, th severity of the market drop and the length of months the recession lasted was only +.03. The other factors that correlated to market drop during recessions was depth of unemployment rate correlating positively by .12 to depth of market  correction, and depth of GDP drop correlating positively to market drop by .35. 

Peter Ringel writes: 

Damn Ralph!  Incredible call today.

Ralph Vince  writes: 

No but I thought it would be on much havier volume., 111/2 tims what we saw today.

Hernan Avella writes: 

maybe with more volume we get to 2150 by labor day, as you vehemently forecasted


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