The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 14

Stock Prices Abroad: Seven More Market Mirrors

How often can you find a stock that rises in a falling market? Lots of folks hope to, but few do. When the market falls in a big way, so do almost all the stocks. So do almost all the stocks in all the countries. This chart shows another way to look at the stock market's global nature, as described in Chart 13. It shows the amazing correlation between these seven major countries' stock markets. The vertical lines running through all the charts reflect high and low time periods for the U.S. market. While each country has its own jiggles, Canada, France, Germany, and the United Kingdom match the American action within months, often within weeks. Japan and Italy vary a bit more but show many similarities.

Take, for example, the major decline that ended in late 1974. It rippled through all these countries, and, except for Italy, each country's stock market reached a bottom within months of when market troughs developed in the other countries. Walk your way through the declines in the United States, Japan, West Germany, France, and the United Kingdom. They all started and ended within months of each other. Sure, France and Japan appear to have bottomed out about a month earlier than the others, but they were all awfully close together.

Then there was the American stock market's bull phase that ended at year-end 1972. It was perfectly coincident with Japan's peak, a temporary Canadian peak, and it happened just before Germany's ...