Finding a model for a stock-market era can lead to surprises.
Take a look at the chart above. The resemblance between the Nasdaq since 1992 and the Dow from 1922 to 1946 is startling.
What did the Dow's run-up to its 1929 peak and the Nasdaq's run-up to 2000 have in common
The common drivers were inventions, household penetration by new products, savvy entrepreneurs and confident consumers.
The 1920s brought fast-rising market penetration for the car and the radio. Opportunities took odd twists. According to researchers at the University of Colorado, Kirby's Pig Stand in Dallas became the first drive-in restaurant in 1921.
The Pig Stand was first to see the link between cars and meals on the road. Motels and gas stations sprang up. Cars drove demand for rubber, steel, paint and glass. Radios became common. Advertising grew.
The 1990s also were about new products — the growth of faster computers, the Internet and mobile phones.
Economic downturns also have common elements. Forget the political blame game. For investors, the chief insight is the length of the slumps and a sense for what kind of recovery followed.
Where are we now
In the fourth edition of "," William J. O'Neil noted that, "History is now on the march, but it's not like 1929, it's like 1938.
That was published in 2009. Four years later, the market should be like 1942, right? It doesn't always work that way. Mark Twain said history rhymes. But eventually, free verse replaces the rhyming scheme.
Today's market isn't a good match for 1942; we've had the good fortune to avoid the modern equivalent of World War II.
So, now the lines diverge.
Where is the model for 2013
Look at a chart of the Nasdaq this year. In the first quarter, the Nasdaq rose 8.2%. In Q2, it rose 4.2%. As of Aug. 23, the Nasdaq's Q3 gain was 7.5%.
Looking through the January-to-August charts, we found only one year that was close.
It was the 1922 Dow. Q1 brought a 10.2% gain; Q2, 4.4%; and the partial August, 7.4%. For a look at that overlay chart, see this article on the IBD University page in Investors.com.
The rest of 1922 was choppy. But the good news was that 1922 was two years away from a supercycle bull run. Could it happen again? Now that would be a nice rhyme.
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