1929 versus 2009 for the stock market.

I found this post from the TheMarketGuardian.com which it posted in March comparing the 1929 Crash to this crash. I have taken the liberty to place their chart at the top of this post and an excerpt I found worthy of a comment. First here's the excerpt:

"P/E is now 14, after falling from its bubble-highs. Leonhardt points out that in past crashes it hit 7 or so. Stocks have another 50% to go. (P is stock price, E is 10 year trailing earnings). 14 is a normal P/E, but not a bargain level, particularly in a recession. So far the crash has brought us back to normal, nothing more. A 4000 Dow might just happen.

This may be a particularly ugly crash simply because stocks were more overpriced."

I have 2 charts above. One is from TheMarket Guardian of the 1929 Crash and the other is a chart of the Dow in the recent 20 years to use as comparison.

I do not see us going this low UNLESS we have one of these issues President Obama is doing the best he and his Administration can, blows up. There are plenty of hand wringers around, as this entire article clearly shows. But the magnitude of these issues is sufficient to get us back down to a Dow of 6,400 again. To me the safest bet over the next year or two is this: When in doubt about market direction lean more to the Short side than the Long side. It won't take much to scare people again to panic as nerves are still sensitive. It will take a very long time to erase the fear and go Long as this financial disaster has yet to claim more victims, including Banks. This issue has rocked the Consumer for years to come. And the Unemployment numbers keep reinforcing those fears for Millions of Americans, their family and their neighbors. We are all affected whether we like it or not. Do we spend the time necessary to find out who caused this problem and find soem who should be in Jail? No. But we should!