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Dow Jones Industrial Average History

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Bull signal #12 was the last signal on the previous page. As you can see, that anticipated bullish cycle was pathetic. The Mid-term Indicant had to signal bear at signal #01 when the Dow fell below the short-term green curve with Force Vectors in bearish domains. That occurred on Jul 31, 1914. At that time, the Mid-term Indicant enjoyed a 112.1% advantage over buy and hold. By bear signal #07 on Jul 6, 1917 the Indicant account balance was at $30,655. Buy and hold's account balance was at $14,076. The Mid-term Indicant enjoyed a 117.8% advantage. As you can see, the bear cycle following #07 justifies the Indicant model, even though bull signal #04 through bear signal #07 endured small losses.

 

President Wilson lead three stock market bears during his first four year's in office. He was an extraordinarily meddlesome president. Despite his egomaniacal condition, the pre-election year was extraordinarily bullish, which is a common theme during the manufacturing of weapons and ordnance for a major war-time build up.

DJIA Index is congruent with presidential election cycle historical standards with market falling in the post election year of 1913. The great Charles E. Sorensen of Ford Motor company developed the first mass production line, which was copied by hundreds of manufacturing companies over the next fifty years. For example, Emerson Electric's CEO copied the "Ford System" in the 1920's. That lowered the cost of manufacturing electric fans by over 80%. Shigeo Shingo, a consultant for Toyota, improved Sorensen's methods from the 1950's through the 1970's, while providing recognition to Sorensen's efforts sixty years earlier. Dr. Edward Deming and General George C. Marshall had nothing to do with the greatness of Shingo's achievements. They are erroneously recognized for Japan's economic success following World War II. Now, back to the current situation of 1913-1917.

Unfortunately, as you can see, the creation of the Federal Reserve was not inspirational to the stock market bull. The outset of World War I, WWI, did not help. As you can see, the stock market dropped significantly at bear signal #01 in 1914. This resulted in the Indicant losing a little, but buy and hold lost the same.

You will later notice how human mores and morals have changed since this era. The onset of World War I was reason enough to close the stock market for several weeks. That is why there are no data points in late 1914 and thus the reason for the flat line. You will later see that wars no longer justified the closing of the stock market. You will also later see that wars are actually bullish for the stock market. For example, FDR needed a war to cover up his incompetence.

President Woodrow Wilson's so-called "progressive movement" certainly did not arouse economic robustness. The folks at institutions, such as Princeton, learn all the words in the dictionary and figure out how one of them sounds better than "master thievery." They then use it. Henry Ford was progressive; President Wilson was not progressive. He simply new fancy words from the dictionary. No politician has ever been progressive. On the contrary, they slow real progress, while Henry Ford's vocabulary was not match for Wilson's. What is more important; knowing the most words in the dictionary or make millions wealthy through the production of the automobile?

Woodrow Wilson had a harmonistic relationship with Congress. Consequently, the stock market bear expressed its approval with profound bearish magnitude, while Wilson and his intellectual pals enjoyed the good life. The American people were stupid enough to grant Wilson a second term, which is common during war. Rest assured, all politicians know that and rank their re-election of higher importance than body count from war..

The market anticipated the 1913-14 recession by about five months, which is close to the expected anticipation cycle of six to eight-months. You will later see how the market does not always successfully anticipate recessions - at least not directly.

The stock market bear was aroused with the income tax amendment in early 1913 and the creation of the Federal Reserve. The stock market bear demonstrated its punch with those two horrible events. The economy followed with a recession. Of course, the economy rebounded well, as WWI matured. FDR learned this little trick for WWII.

One reason the Indicant performed exceedingly well against Buy&Hold is ten years of flat market performance with pronounced cyclical behavior.

 

 

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