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Monday, September 14, 2009

A Very Interesting Graph

from the Financial Tines Sept 12/13 edition (click to enlarge)

two Observations

1. The curve here is not "bell shaped". Large magnitude moves are far more common on the downside than on the upside. And of course for most individual investors (who don't engage in shorting) the downside moves are those that they are concerned about.

2. A gain of the magnitude that has occurred over the past 6 months has occurred only .5% of six month periods . In other words an investor who was out of the market for the past six months missed what was literally a once in a lifetinme opportunity. Such a move has not occurred since the 1932-1933 period.

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