WILL BIG CRISIS 2.0 COME?

History repeats itself or not? Most historians are arguing this popular statement, they are concerned about any recurrence. But I found some remarkable correlation between the Big Crisis 1.0(1929-1933) and the recent recession since 2008. Big Crisis 2.0?

This whole article is only a funny way of chart analogies, so don’t plan on that too much.

The common point is we as human beings act mostly like a herd. That is one of our biggest trading and investment bias. We are the same greedy as people were at 1929 and have exactly the same fear as it was in 1929. We never change and never learn anything from our failures and mistakes. Those charts show us some analogies. Could we read the future from those charts?

This chart below by Zerohedge shows the history repeats itself so far. The period is 1930-1942 and 2007-2013.

In the last 6 years the similarity is shocking. This is the good news. The bad news is that in 1939, 10 years after the crisis the 2nd World War erupted.

And here we can find a brutal correspondence in the rates.

And what happened in 1936-37, after 7 years the start of the crisis 1929? At first the market started to decline and dropped all in all 40% within 3 months. At the beginning just dropped 15% and then recovered and back tested the previous top. And finally plunged 40% and just started again recover after the war.

This is not an optimistic scenario in terms of war, but the good news is the History never repeats itself.

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The BFM Assets Team.