Will US repeat mistakes of 1937?

[WriteDown]

"The specter of 1937 hangs over the economy and the stock market.

That's the year when overconfidence that the Roosevelt administration had whipped the Great Depression and that it was time to balance the federal budget led to another deep recession that wiped out three years of growth and sent the economy reeling back to the Depression depths of 1934.

The Dow Jones Industrial Average ($INDU), which had climbed 127% from a low of 85.51 in July 1934 to a high of 194.40 in March 1937, fell 49% to 98.95 by the end of March 1938 -- not far above its '34 low. (Remember, it takes only a 50% loss to wipe out a 100% gain.)

After that collapse and another one in 1942, stocks didn't match that 1937 peak until 1945.

I wrote on my blog a few days ago that "most of the time," after big rallies like the one going on now, the stock market has remained higher a year later.

Almost always. The one big exception, the one that delivered a loss big enough to wipe out portfolios, came in 1937....."