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Here's the Stock Market Anniversary Wall Street Wants you to Forget
" ... The Internet bubble peaked 17 years ago this week
This week represents the 17th birthday of the longest equity bear market in U.S. history. Good luck finding anyone "celebrating" that birthday, much less even mentioning it.
That's because everyone is falling over themselves this week commemorating another anniversary — the allegedly longest bull market in history. They're referring to the bull market that began eight years ago, on Mar. 10, 2009. In fact, however, their celebrations are yet more evidence of the irrational exuberance that is building on Wall Street.
The existence of this record-setting bear market is just one reason why their celebrations are inappropriate. But before I discuss that bear market, I want to first point out that the bull market that began in March 2009 died many years ago. To say that it's still alive requires a major dose of historical revisionism — "fake news," if you will.
But you'll really get out of the celebratory mood upon discovering that this week marks the 17th anniversary of the longest bear market in U.S. history. I'm referring to the decline that began on March 10, 2000, when the Internet bubble burst. Taking dividends and inflation into account, the NASDAQ 100 NDX, +0.26% is 12.7% below where it stood that fateful day 17 years ago. (See chart, above.)
It's crucial to factor in dividends and inflation. Otherwise appears as though the longest equity bear market is the one that began with the 1929 stock market crash and lasted until 1954 — which is when the Dow Jones Industrial Average DJIA, -0.08% surpassed its 1929 peak. But the stock market's dividend yield during the 1930s was in the double-digits, and the economy experienced negative inflation (also known as deflation) — both of which factors made it look like that era's bear market lasted longer than it really did.
In fact, according to data from investment researcher Morningstar, the dividend-adjusted and inflation-adjusted stock market by late 1936 was just as high as it had been at the 1929 pre-Crash high. That bear market lasted a little more than seven years, in other words — a far cry from the 17 years, and counting, that the recent bear market in Nasdaq COMP, +0.27% stocks has lasted.
It perhaps is understandable why Wall Street would want us to forget this 17-year-old bear market. But that is all the more reason why we should pay attention to it.
As Berkshire Hathaway's BRK.A, +0.08% BRK.B, +0.01% Warren Buffett famously has said, we should "be fearful when others are greedy and greedy when others are fearful." The celebrations this week tell you which piece of this advice we should be following now.
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