The Stock Market as a Business Cycle Predictor, Bull Markets and Expansions

The Dow Jones Industrial Average developed by Charles H. Dow in 1895 and the Railroad (now Transportation) Average added in 1897, were originally intended to be indicators of business activity. By adding the Bull and Bear definitions (shown above) you can see that "the market" has been an excellent ‘Predictor’ of the economy in the 20th century as shown below:
Bull Markets and Expansions
BULL MARKET DATES:	BUSINESS EXPANSION DATES:	LENGTH IN YEARS OF THE BUSINESS EXPANSION:	LEAD TIME OF BULL MARKET START TO EXPANSION START:
9/00 - 6/01	12/00 - 9/02	1.8	3 months
11/03 - 1/06	8/04 - 5/07	2.8	9
11/07 - 11/09	6/08 - 1/10	1.4	7
9/11 - 9/12	1/12 - 1/13	1.0	4
7/14 - 11/16	12/14 - 8/18	3.7	5
12/17 - 11/19	3/19 - 1/20	.8	15
8/21 - 3/23	7/21 - 5/23	1.8	-1
10/23 - 9/29	7/24 -10/26	2.3	9
	(11/27 - 8/29)	1.8	n/a
7/32 - 3/37	3/33 - 5/37	4.2	8
3/38 - 11/38	6/38 - 2/45	6.7	3
4/42 - 5/46	Same as above		n/a
	(10/45 -11/48)	3.1	n/a
6/49 - 4/56	10/49 - 7/53	3.75	4
	(5/54 - 8/57)	3.25	n/a
10/57 - 12/61	4/58 - 4/60	2.0	6
6/62 - 2/66	2/61 - 2/66*	5.8	-16
10/66 - 12/68	6/67*-12/69	2.5	8
5/70 - 1/73	11/70 - 11/73	3.0	6
12/74 - 9/76	3/75 - 1/80	4.8	3
2/78 - 9/78	Same as above		n/a
4/80 - 4/81	7/80 - 7/81	1.0	3
8/82 - 8/87	11/82 - 7/90	7.7	3
10/87 - 7/90	Same as above		n/a
10/90 - 7/98	3/91 - 3/01	10.0	5
8/98 - 1/00	Same as above		n/a
9/01 - 3/02	11/01 - ?	?	2
10/02 - ?	Same as above		n/a
	Average:	3.3 years	4.3 months
per Forbes Magazine 1/23/89, the economic expansion was interrupted by a "growth recession" when Industrial production fell from the 1st quarter to the 3rd quarter of 1967. ÞThe BOTTOM LINE: 100% of Bull Markets in the 20th-21st Century have been accompanied by or followed shortly thereafter (4.3 months on average) by economic expansions.* The following are additional pages of this section:

Results and Defined \| Historical Record The Bull and Bear Bell Curves \| Bear Markets & Recessions
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