20 Largest Market Caps Over The Years

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Since the Dow Jones declined to its BEV -10% level at the end of October, it’s been either advancing towards record territory, closing at new all-time highs (eleven so far since November 16), or closing within 1% of a new all-time high.  Still, just looking at the Dow Jones, and not the social-media stocks, the market action hasn’t become a mania.  From last February’s last all-time high, just before the 37% correction, these eleven new BEV Zeros pushed the Dow Jones up by only 5.54% above last February’s record close, not that there is anything wrong with that.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 689\Chart #1   DJ BEV 2007 to 2021.gif

Here’s the Dow Jones in daily bars.  Since the late October’s market drop off, the Dow Jones has been advancing and declining each day in little baby steps, and that’s excellent market action for the bulls. Until we once again begin seeing days of extreme volatility, the dreaded Dow Jones 2% days, I’m expecting to see further gains in the Dow Jones, which is my proxy for the broad-stock market.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 689\Chart #2   DJIA OHLC.gif

Moving on to the BEV values for the major market indexes I follow in the table below, Wednesday (January 20) was a powerful day in the market with fourteen of the indexes closing at new all-time highs, and two more in scoring position (within 5% of a new all-time high).

Look at the NASDAQ Bank index (#17) and the NYSE Financial index (#19).  Last July they were below the XAU in this table, not now. The NYSE Financial Index in its BEV chart below hasn’t seen a new all-time high since the summer of 2007, and now it’s moving towards a new all-time high.  True, this is its third attempt to make market history since 2017, and it failed on the first two. But like anything else worth doing, it’s try, try again.

Still, considering everything, as far as I’m concerned the NYSE Financial index remains damaged goods in the aftermath of the sub-prime mortgage fiasco. At its 2009 market bottom it was down by 80% from its highs of 2007. That’s a Great Depression type bear market bottom we’re seeing in early 2009. Look at how far it dropped last March; from a BEV -10% down to -50% in less than a month!  But then damaged goods can do that in the stock market.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 689\Chart #3   NYSE Financial Idx BEV.gif

Yes but the XAU was down by 83% at its January 2016 bottom; still I’m recommending the gold and silver miners? That’s true, as historically the gold and silver miners are a volatile market sector, while financial companies are not.  

Here’s a volatility comparison between banking stocks and the BGMI. From 1938 to 1971 the Dow Jones Total Market Banking Index never saw a 40% correction. However, soon after the US Treasury decoupled the US dollar from the Bretton Woods’ $35 gold peg in August 1971, all that changed as banking then became a risky business.

Freeing the US dollar from the Bretton Woods’ $35 gold peg greatly increased these banks ability to expand credit (make banks loans). Unfortunately, the new clients these banks found to extend credit to frequently defaulted on the loans made to them.

Note for the Banking BEV chart: my data only goes back to July 2018.

The BGMI since 1920 has seen frequent corrections in excess of 50%, as seen above. Currently the BGMI is down over 40% from its last all-time high of April 2011, coming off of an 85% bear market bottom. For the gold miners, wild volatility is just business as usual. The history seen in the BEV chart above shows that in a good market, the BGMI could be at new all-time highs by next October.

Financial companies are completely different. Since 2008 the US government has been subsidizing these financial companies with trillion dollar cash infusions and changing their accounting rules for their worthless reserves to make them appear viable. Still, the NYSE Financial Index hasn’t seen a new all-time high since the summer of 2007. Reasonable people remain fearful these financial companies may revisit its BEV -80% bottom once again sometime in the future.

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