Dow Jones industrial average surges to record
NEW YORK (AP) - The stock market is back.
Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios and made investors despair of ever getting their money back, the Dow Jones industrial average has regained all the losses suffered during the Great Recession and reached a new high. The blue-chip index rose 125.95 points Tuesday and closed at 14,253.77, topping the previous record of 14,164.53 on Oct. 9, 2007, by 89.24 points.
"It signals that things are getting back to normal," says Nicolas Colas, chief market strategist at BNY ConvergEx, a brokerage. "Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement."
The new record suggests that investors who did not panic and sell their stocks in the 2008-2009 financial crisis have fully recovered. Those who have reinvested dividends or added to their holdings have done even better. Since bottoming at 6,547.05 on March 9, 2009, the Dow has risen 7,706.72 points or 118 percent.
The Dow record does not include the impact of inflation. Adjusted for that, the Dow would have to reach 15,502 to match its old record.
The Standard and Poor's 500, a broader index, closed at 1,539.79, 25.36 points from its record.
The last time the Dow hit a record, George W. Bush still had another year as president, Apple had just sold its first iPhone, and Lehman Brothers was still in business.
But unemployment was also 4.7 percent versus 7.9 percent today, a reminder that stock gains have proved no elixir for the economy.
Still, the Dow high is another sign that the nation is slowly healing after the worst recession since the 1930s. It comes as car sales are at a five-year high, home prices are rising, and U.S. companies continue to report big profits.
The stock gains have helped retirement and brokerage accounts held by many Americans recover. That, in turn, has helped push U.S. household wealth nearly back to its peak before the recession, though many in the middle class are still deep in the hole. Most middle-class wealth is tied up in home values, which are still a third below their peak.
Good economic news Tuesday helped lift stocks. Retail sales in the 17 European countries that use the euro rose faster than expected, China's government said it would support ambitious growth targets, and a report showed U.S. service companies grew last month at their fastest pace in a year.
"It feels great," says Marty Leclerc, chief investment officer at Barrack Yard Advisors, an investment firm. In early 2009, when stocks were plummeting, "it looked like Armageddon was nigh. It's a lot more fun to be in a rising market."
In the depths of the recession four years ago, few investors would have predicted such a fast recovery. Some feared another Great Depression. Banks were collapsing, lending was frozen, world trade was plunging, and stocks were in free fall.
"People thought we were going to relive the 1930s," says Robert Buckland, chief global stock strategist at Citigroup. He calls the stock gains since "pretty remarkable."
From its peak in October 2007 to its bottom in March 2009, the Dow fell 54 percent. That was far less than the nearly 90 percent drop in the Great Depression but scary nonetheless. There had been 11 previous bear markets since World War II and none had reached 50 percent.
One man who stayed calm and didn't sell was Jay Sachs, 70, a retired computer consultant. In fact, as others scrambled to exit stocks in late 2008, he plunged in more - scooping up drug maker Ely Lilly and Co., health-care products giant Johnson & Johnson and food company General Mills.
"You have to be greedy when others are fearful," he says, quoting a famous line from billionaire Warren Buffett, who also bought in the panic. Sachs adds, "People are still fearful and that's a good sign. There's room for growth."
He says his portfolio has doubled in value in four years.
As stock rebounds go, this has been an unusually quiet and uncelebrated one. Typically, bull markets are accompanied by rising trading volume, a surge in young companies going public and Internet chatter over hot stocks.
The past four years, none of that has happened.
Adding to the chastened mood is lingering fear among many investors that stock gains can disappear in a flash. Burned by two stock-market crashes in less than a decade, Americans have sold more U.S. stocks than they've bought the past four years, nearly unprecedented in a bull market since World War II.
In this run-up, nearly all the buying has come from companies repurchasing their own stock in an effort to boost its value. Companies in the S&P 500 have bought $1.5 trillion since the Great Recession began in December 2007.
Dow records are dismissed by some investors as unimportant because the index comprises just 30 stocks. Many professional investors prefer to follow the S&P 500, which, as the name implies, tracks 500 companies. But the Dow has closely followed the ups and downs of its broader rival over the years, and is a good proxy for how big companies are doing.
The S&P 500 is up 128 percent from its March 9, 2009 low, about the same as the Dow.
The Dow record is a victory of sorts for Federal Reserve Chairman Ben Bernanke. Under his aegis, the Fed launched an unprecedented campaign to lift stocks by making their chief rival for investor money - bonds - less attractive.
Under a program called "quantitative easing," the Fed has bought trillions of dollars of bonds to drive their yields down. The idea was that the puny yields would so frustrate investors, they'd have no choice but to shift into stocks. That, in turn, would push up stocks and make people feel wealthier and more willing to spend, helping the economy.
Just as Bernanke had hoped, American household wealth, or assets minus liabilities, has risen, though the gains haven't been shared equally.
In the recession, household wealth fell $18.9 trillion, or 28 percent, as the prices of assets like stocks and homes tumbled. But after bottoming in the first quarter of 2009 at $48.5 trillion, wealth rose $16 trillion through the third quarter of last year and was within striking distance of its peak of $67.4 trillion, according to the latest data from the Federal Reserve. Gains since then may have pushed wealth to a new high.
Middle-class households have not recovered as much as those numbers suggest because most of their wealth is tied up in their homes, and home values haven't bounced back like 401(k) accounts.
Homes accounted for two-thirds of middle-class assets before the recession, estimates economist Edward Wolff of New York University. By contrast, they accounted for one-third of assets of all U.S. households. Stocks were 7 percent of middle-class assets, less than half the percentage for all.
The rich have been the biggest winners of this bull market. Eighty percent of all stocks are held by the wealthiest 10 percent of households.
The question now: Can the stock rally continue? Here are four reasons it could:
- Plenty of cash: Companies have enough money to keep buying shares, which can push stocks up in the short term. Companies in the S&P 500 had more than $1 trillion in cash late last year, two-thirds more than in 2007.
- Low inflation and interest rates: Two factors that typically spell the end of a bull market seem a long way off. Inflation has been 1.6 percent the past 12 months, below the Fed's 2 percent target. Interest rates are near record lows; the short-term rate the Fed controls is being kept between zero and 0.25 percent. The Fed has said it plans to keep the rate where it is until unemployment falls below 6.5 percent, or 1.4 points lower than it is today. Even when the Fed starts raising the rate, it could be years before it gets high enough to hurt the economy and stocks.
Four of the five previous bull markets since 1970 ended as investors got spooked by a recession, or the anticipation of one, and sold stocks. And what causes recessions? In three of the past five, it was the Federal Reserve hiking interest rates to slow inflation.
- Economic expansion: The economic expansion that began 44 months ago in June 2009 is still relatively young. The previous three expansions lasted 73, 120 and 92 months. And this one may finally be getting traction: Sales of new homes in January hit the highest rate in 4 ½ years. Home prices in January were up nearly 10 percent nationwide from a year earlier. And sales of autos, the second-biggest consumer purchase, reached a five-year high. Most important, hiring is picking up. Employers added an average 200,000 jobs each month from November-January, compared with 150,000 in each of the prior three months. More jobs means more money for people to spend, and consumer spending drives 70 percent of economic activity.
- Stocks still seem reasonably priced based on the earnings that companies are generating. On average, stock prices are 17.5 times per-share earnings in 2012 versus 19.4 times in 2007. Today's price-earnings ratio is the same as the average since World War II.
If per-share earnings keep growing, stock prices could go up too, and the P/E ratio would stay the same. And there have been many periods in which the average P/E ratio rose well above the long-average. Such "multiple expansion," as market watchers refer to a rising P/E ratio, would mean stock prices would be even higher.
To stock bulls, the economy is on the verge of what Bernanke calls "escape velocity," a self-sustaining pace of growth and better than the sluggish 1-2.5 percent of the past three years. Faster economic growth would boost corporate earnings, which would lead to higher stock prices.
Of course, if investing was as simple as looking up interest rates and stock valuations, we'd all be rich. Plenty can go wrong.
For starters, future earnings, the biggest driver of stock prices, could prove disappointing. Financial analysts expect earnings for the S&P 500 to grow a healthy 8 percent this year, according to FactSet. Most of that increase is expected in the last half when they assume economic growth accelerates.
Will that happen? It's anyone's guess, and financial analysts are often too bullish. A year ago, they expected a 13 percent jump in earnings in the last three months of 2012. They got 4 percent instead.
Investors also need to pay attention to what's happening in the rest of the world. Big U.S. companies generate nearly half their revenue from overseas. The 17 European countries that use the euro as a currency have been in recession for more than a year. Japan, the world's third-largest economy, fell into one late last year. Stock markets tend to look ahead, so what matters is whether the recessions deepen in Europe and Japan or those economies start growing again.
Another worry is what will happen after the Federal Reserve stops stimulating the U.S. economy. Last month, minutes of the Fed's last policy meeting were released, and they showed members disagreeing on when to stop. The Dow lost 155 points in two days.
Jeff Sica, founder of money manager Sica Wealth Management, says the rising market is good because it's a sign of confidence. But he fears stocks could sink when the Fed stops buying bonds.
It's a big "psychological reason the market is going up," he says. "People know the Fed will continue to inflate assets."
The Fed stimulus was in response to the worst economic recession since the 1930s.
The Great Recession began in December 2007, two months after the Dow and S&P 500 reached their peaks in October. It was triggered by a drop in home prices that hammered consumers and banks. Nine months later, in September 2008, Lehman Brothers declared bankruptcy and lending froze worldwide.
Panicked investors began pulling money out of stocks. Prices, which had been falling slowly, nosedived. By March 9, 2009, the Dow had fallen 54 percent and the S&P 500 57 percent.
In total, $11 trillion in stock wealth, or 12 years of stock gains, were wiped out in 17 months.
Despite widespread fear then, the history of bear markets was encouraging. In the second- and third-worst bear markets since World War II, the S&P 500 fell 49 percent in 2000-02 and 48 percent in 1973-74. Both times the climb back took less than six years.
But few people believed four years ago that the return would be so fast.
A few days after stocks bottomed, a BusinessWeek cover story laid out three scenarios for regaining the losses. The most pessimistic held that stocks would notch 6 percent gains each year and the Dow would return to its old high in 2022, 13 years later. The most optimistic assumed 10 percent annual gains and saw a return in 2017, eight years later. The Dow has rebounded in about half the time as the most optimistic case.
The climb hasn't been smooth, though.
In May 2010, a trading glitch set off a so-called flash crash that sent the Dow plunging 600 points in five minutes. In August 2011, stocks yo-yoed for several days on fears that the U.S. would default on its debt. Over three weeks, the Dow plunged 2,000 points. Last October, the Dow fell 1,000 points over six weeks on worries that a budget deal wouldn't get passed and the economy would go over the "fiscal cliff."
But the Fed's bond buying and the ability of companies to produce record profits helped the market overcome every setback.
In the turbulent journey to new highs, Wall Street strategists and other experts have predicted many times that small investors were about to fall in love again with stocks. The "dry powder" of their money would set fire to an already hot market. After all, small investors had helped push stocks up in the great bull market of the '80s, which began in August 1982. Those who had left the market years earlier began buying again, and stocks more than tripled in five years.
They drove a bull market again in the 1990s. Stocks more than quintupled in 9 ½ years.
But small investors have not only stayed away the past four years, they have sold hundreds of billions of dollars of stocks.
Then, in January, as the Dow inched closer to its record, individual investors seemed to have second thoughts. They put nearly $20 billion more into U.S. stock mutual funds than they took out in January, according to the Investment Company Institute, a trade group for funds.
It was just a trickle, but it may have helped stocks surge. In January, the Dow rose 5.8 percent, and the S&P 500 rose 5 percent. It was the best start to a year for the Dow since 1994.
For good or ill, it's possible the Dow's new high might convince investors to put more money into stocks.
"When you hear about new highs, the greed factor kicks in," says Colas, the BNY ConvergEx strategist. "It gets people to think, 'Do I own enough stocks?'"
Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios and made investors despair of ever getting their money back, the Dow Jones industrial average has regained all the losses suffered during the Great Recession and reached a new high. The blue-chip index rose 125.95 points Tuesday and closed at 14,253.77, topping the previous record of 14,164.53 on Oct. 9, 2007, by 89.24 points.
"It signals that things are getting back to normal," says Nicolas Colas, chief market strategist at BNY ConvergEx, a brokerage. "Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement."
The new record suggests that investors who did not panic and sell their stocks in the 2008-2009 financial crisis have fully recovered. Those who have reinvested dividends or added to their holdings have done even better. Since bottoming at 6,547.05 on March 9, 2009, the Dow has risen 7,706.72 points or 118 percent.
The Dow record does not include the impact of inflation. Adjusted for that, the Dow would have to reach 15,502 to match its old record.
The Standard and Poor's 500, a broader index, closed at 1,539.79, 25.36 points from its record.
The last time the Dow hit a record, George W. Bush still had another year as president, Apple had just sold its first iPhone, and Lehman Brothers was still in business.
But unemployment was also 4.7 percent versus 7.9 percent today, a reminder that stock gains have proved no elixir for the economy.
Still, the Dow high is another sign that the nation is slowly healing after the worst recession since the 1930s. It comes as car sales are at a five-year high, home prices are rising, and U.S. companies continue to report big profits.
The stock gains have helped retirement and brokerage accounts held by many Americans recover. That, in turn, has helped push U.S. household wealth nearly back to its peak before the recession, though many in the middle class are still deep in the hole. Most middle-class wealth is tied up in home values, which are still a third below their peak.
Good economic news Tuesday helped lift stocks. Retail sales in the 17 European countries that use the euro rose faster than expected, China's government said it would support ambitious growth targets, and a report showed U.S. service companies grew last month at their fastest pace in a year.
"It feels great," says Marty Leclerc, chief investment officer at Barrack Yard Advisors, an investment firm. In early 2009, when stocks were plummeting, "it looked like Armageddon was nigh. It's a lot more fun to be in a rising market."
In the depths of the recession four years ago, few investors would have predicted such a fast recovery. Some feared another Great Depression. Banks were collapsing, lending was frozen, world trade was plunging, and stocks were in free fall.
"People thought we were going to relive the 1930s," says Robert Buckland, chief global stock strategist at Citigroup. He calls the stock gains since "pretty remarkable."
From its peak in October 2007 to its bottom in March 2009, the Dow fell 54 percent. That was far less than the nearly 90 percent drop in the Great Depression but scary nonetheless. There had been 11 previous bear markets since World War II and none had reached 50 percent.
One man who stayed calm and didn't sell was Jay Sachs, 70, a retired computer consultant. In fact, as others scrambled to exit stocks in late 2008, he plunged in more - scooping up drug maker Ely Lilly and Co., health-care products giant Johnson & Johnson and food company General Mills.
"You have to be greedy when others are fearful," he says, quoting a famous line from billionaire Warren Buffett, who also bought in the panic. Sachs adds, "People are still fearful and that's a good sign. There's room for growth."
He says his portfolio has doubled in value in four years.
As stock rebounds go, this has been an unusually quiet and uncelebrated one. Typically, bull markets are accompanied by rising trading volume, a surge in young companies going public and Internet chatter over hot stocks.
The past four years, none of that has happened.
Adding to the chastened mood is lingering fear among many investors that stock gains can disappear in a flash. Burned by two stock-market crashes in less than a decade, Americans have sold more U.S. stocks than they've bought the past four years, nearly unprecedented in a bull market since World War II.
In this run-up, nearly all the buying has come from companies repurchasing their own stock in an effort to boost its value. Companies in the S&P 500 have bought $1.5 trillion since the Great Recession began in December 2007.
Dow records are dismissed by some investors as unimportant because the index comprises just 30 stocks. Many professional investors prefer to follow the S&P 500, which, as the name implies, tracks 500 companies. But the Dow has closely followed the ups and downs of its broader rival over the years, and is a good proxy for how big companies are doing.
The S&P 500 is up 128 percent from its March 9, 2009 low, about the same as the Dow.
The Dow record is a victory of sorts for Federal Reserve Chairman Ben Bernanke. Under his aegis, the Fed launched an unprecedented campaign to lift stocks by making their chief rival for investor money - bonds - less attractive.
Under a program called "quantitative easing," the Fed has bought trillions of dollars of bonds to drive their yields down. The idea was that the puny yields would so frustrate investors, they'd have no choice but to shift into stocks. That, in turn, would push up stocks and make people feel wealthier and more willing to spend, helping the economy.
Just as Bernanke had hoped, American household wealth, or assets minus liabilities, has risen, though the gains haven't been shared equally.
In the recession, household wealth fell $18.9 trillion, or 28 percent, as the prices of assets like stocks and homes tumbled. But after bottoming in the first quarter of 2009 at $48.5 trillion, wealth rose $16 trillion through the third quarter of last year and was within striking distance of its peak of $67.4 trillion, according to the latest data from the Federal Reserve. Gains since then may have pushed wealth to a new high.
Middle-class households have not recovered as much as those numbers suggest because most of their wealth is tied up in their homes, and home values haven't bounced back like 401(k) accounts.
Homes accounted for two-thirds of middle-class assets before the recession, estimates economist Edward Wolff of New York University. By contrast, they accounted for one-third of assets of all U.S. households. Stocks were 7 percent of middle-class assets, less than half the percentage for all.
The rich have been the biggest winners of this bull market. Eighty percent of all stocks are held by the wealthiest 10 percent of households.
The question now: Can the stock rally continue? Here are four reasons it could:
- Plenty of cash: Companies have enough money to keep buying shares, which can push stocks up in the short term. Companies in the S&P 500 had more than $1 trillion in cash late last year, two-thirds more than in 2007.
- Low inflation and interest rates: Two factors that typically spell the end of a bull market seem a long way off. Inflation has been 1.6 percent the past 12 months, below the Fed's 2 percent target. Interest rates are near record lows; the short-term rate the Fed controls is being kept between zero and 0.25 percent. The Fed has said it plans to keep the rate where it is until unemployment falls below 6.5 percent, or 1.4 points lower than it is today. Even when the Fed starts raising the rate, it could be years before it gets high enough to hurt the economy and stocks.
Four of the five previous bull markets since 1970 ended as investors got spooked by a recession, or the anticipation of one, and sold stocks. And what causes recessions? In three of the past five, it was the Federal Reserve hiking interest rates to slow inflation.
- Economic expansion: The economic expansion that began 44 months ago in June 2009 is still relatively young. The previous three expansions lasted 73, 120 and 92 months. And this one may finally be getting traction: Sales of new homes in January hit the highest rate in 4 ½ years. Home prices in January were up nearly 10 percent nationwide from a year earlier. And sales of autos, the second-biggest consumer purchase, reached a five-year high. Most important, hiring is picking up. Employers added an average 200,000 jobs each month from November-January, compared with 150,000 in each of the prior three months. More jobs means more money for people to spend, and consumer spending drives 70 percent of economic activity.
- Stocks still seem reasonably priced based on the earnings that companies are generating. On average, stock prices are 17.5 times per-share earnings in 2012 versus 19.4 times in 2007. Today's price-earnings ratio is the same as the average since World War II.
If per-share earnings keep growing, stock prices could go up too, and the P/E ratio would stay the same. And there have been many periods in which the average P/E ratio rose well above the long-average. Such "multiple expansion," as market watchers refer to a rising P/E ratio, would mean stock prices would be even higher.
To stock bulls, the economy is on the verge of what Bernanke calls "escape velocity," a self-sustaining pace of growth and better than the sluggish 1-2.5 percent of the past three years. Faster economic growth would boost corporate earnings, which would lead to higher stock prices.
Of course, if investing was as simple as looking up interest rates and stock valuations, we'd all be rich. Plenty can go wrong.
For starters, future earnings, the biggest driver of stock prices, could prove disappointing. Financial analysts expect earnings for the S&P 500 to grow a healthy 8 percent this year, according to FactSet. Most of that increase is expected in the last half when they assume economic growth accelerates.
Will that happen? It's anyone's guess, and financial analysts are often too bullish. A year ago, they expected a 13 percent jump in earnings in the last three months of 2012. They got 4 percent instead.
Investors also need to pay attention to what's happening in the rest of the world. Big U.S. companies generate nearly half their revenue from overseas. The 17 European countries that use the euro as a currency have been in recession for more than a year. Japan, the world's third-largest economy, fell into one late last year. Stock markets tend to look ahead, so what matters is whether the recessions deepen in Europe and Japan or those economies start growing again.
Another worry is what will happen after the Federal Reserve stops stimulating the U.S. economy. Last month, minutes of the Fed's last policy meeting were released, and they showed members disagreeing on when to stop. The Dow lost 155 points in two days.
Jeff Sica, founder of money manager Sica Wealth Management, says the rising market is good because it's a sign of confidence. But he fears stocks could sink when the Fed stops buying bonds.
It's a big "psychological reason the market is going up," he says. "People know the Fed will continue to inflate assets."
The Fed stimulus was in response to the worst economic recession since the 1930s.
The Great Recession began in December 2007, two months after the Dow and S&P 500 reached their peaks in October. It was triggered by a drop in home prices that hammered consumers and banks. Nine months later, in September 2008, Lehman Brothers declared bankruptcy and lending froze worldwide.
Panicked investors began pulling money out of stocks. Prices, which had been falling slowly, nosedived. By March 9, 2009, the Dow had fallen 54 percent and the S&P 500 57 percent.
In total, $11 trillion in stock wealth, or 12 years of stock gains, were wiped out in 17 months.
Despite widespread fear then, the history of bear markets was encouraging. In the second- and third-worst bear markets since World War II, the S&P 500 fell 49 percent in 2000-02 and 48 percent in 1973-74. Both times the climb back took less than six years.
But few people believed four years ago that the return would be so fast.
A few days after stocks bottomed, a BusinessWeek cover story laid out three scenarios for regaining the losses. The most pessimistic held that stocks would notch 6 percent gains each year and the Dow would return to its old high in 2022, 13 years later. The most optimistic assumed 10 percent annual gains and saw a return in 2017, eight years later. The Dow has rebounded in about half the time as the most optimistic case.
The climb hasn't been smooth, though.
In May 2010, a trading glitch set off a so-called flash crash that sent the Dow plunging 600 points in five minutes. In August 2011, stocks yo-yoed for several days on fears that the U.S. would default on its debt. Over three weeks, the Dow plunged 2,000 points. Last October, the Dow fell 1,000 points over six weeks on worries that a budget deal wouldn't get passed and the economy would go over the "fiscal cliff."
But the Fed's bond buying and the ability of companies to produce record profits helped the market overcome every setback.
In the turbulent journey to new highs, Wall Street strategists and other experts have predicted many times that small investors were about to fall in love again with stocks. The "dry powder" of their money would set fire to an already hot market. After all, small investors had helped push stocks up in the great bull market of the '80s, which began in August 1982. Those who had left the market years earlier began buying again, and stocks more than tripled in five years.
They drove a bull market again in the 1990s. Stocks more than quintupled in 9 ½ years.
But small investors have not only stayed away the past four years, they have sold hundreds of billions of dollars of stocks.
Then, in January, as the Dow inched closer to its record, individual investors seemed to have second thoughts. They put nearly $20 billion more into U.S. stock mutual funds than they took out in January, according to the Investment Company Institute, a trade group for funds.
It was just a trickle, but it may have helped stocks surge. In January, the Dow rose 5.8 percent, and the S&P 500 rose 5 percent. It was the best start to a year for the Dow since 1994.
For good or ill, it's possible the Dow's new high might convince investors to put more money into stocks.
"When you hear about new highs, the greed factor kicks in," says Colas, the BNY ConvergEx strategist. "It gets people to think, 'Do I own enough stocks?'"
Hmmmm......Nobody I know is better off today than they were four years ago. We sure haven't seen any kind of recovery. Wages have in no way, shape or form kept up with the rising cost of living.
Somewhere in these numbers there is a bubble... care to direct me to it?
...I smell massive inflation!...
Woohoo! This is great news for those who depend on private and public pension funds for their retirements! Luv me some DOW, baby! Boo-yeah or Bu-yah (never sure which is which)!
when the numbers looked bad, these doomsayers proclaimed them accurate, and heralded the fall of our nation... Now that the numbers look good, these same doomsayers proclaim you can't trust the numbers, because they're inaccurate... and this heralds the fall of our nation. Can you lunatics just move somewhere else and herald your own dam fall please!
@TruthinAdverts The truth is you can't ever trust the numbers without some sort of price discovery. Without price discovery, a bedrock of capitalism, all the numbers are fake. If you want to stay in stocks then sell all your supposedly professionally administered stocks and mutual funds and become a day trader. Wall Street hates that but its the only way to make a profit off of stocks if you do your research. In the last 12 years we've had an 80% drop in mutual fund portfolios and it will take over 20 years for those portfolios to ever regain the 80% they lost at a minimum. If you really want to invest in something secure, invest in yourself.
DAMN OBAMA it's all his fault!!!!
@Bob42263It soon will be when it bombs and rights itself. http://www.usatoday.com/story/opinion/2013/03/04/federal-reserve--quantitative-easing/1963539/  Â
To combat the Great Recession, the Fed has bought trillions of dollars of mortgage bonds and U.S. Treasuries to juice the housing market and the economy in general.
On balance these purchases â which go by the non-threatening name of "quantitative easing" â have been warranted, given the deep economic problems caused by the financial crisis. But the time is approaching to scale back the bond-buying spree and get ready to unwind some of the Fed's massive portfolio, which now tops $3 trillion. The longer the policy lasts, the more likely it will end unhappily.
It's a mirage at this point. Beware.
@d_2Â @Bob42263Â just more taxpayer money to make the 1% life easier. I don't think any President elected in this country would have done anything different with the FED, in reality the President has little power to change FED policy. End the FED or make many changes like having the board of the FED no conflicts of interest to serve on it. Right now the FED is just helping their friends and themselves to tax payer money and we are paying them to do it....
Sell !!!!!!!!!!!!!!!
This article is quite an inspiration! I'm going to call my broker right now, and sell.
And yet the Tony Dow average still sits the same as when Leave it to Beaver ended its run.
@AdAckbar That made my day.Â
The stock market is no indication of the financial health of the country. Its just a gambling casino for the rich and powerful to extract more profits from others hard work. Its of no benefit to private investors like you and I. I was lucky enough to have gotten out in 2000 before the first recession hit. Sold everything and cashed out. The smartest move I ever made in investments and it was caused by a simple blue collar man that said to get out of US stocks when a republican is president and then he explained why. I listened and have been in his debt ever since. Get out of the stock market if you own any stocks, bonds, mutual funds. There is no prise discovery any more. There is no way to see what a stock is really worth in the real world because the stock market has become nothing but fantasy.
Are you saying that only Rebubs are rich enough to invest... otherwise I aggre with most other points.. the other foot will drop soon I'm sure.
@Linc239Â No far from it. Greed crosses all ethnic, religious and political boundaries. Its a disease of sorts, an addiction. People can have addictions to all kinds of things like alcohol, drugs, cheese burgers or whatever. Greed is just more of a violent disease that effects far more people than any other disease does.
Well, another bubble created by the rich, soon it will burst, and once again the tax payer will foot the bill so the rich can keep their high paying jobs and get lavish bonuses for failing. Democrat or Republican, does not matter, the rich run the country which is now by the rich, for the rich and of the one percent who are the rich.Â
@growlerxrunner What of all the 401K's that people are forced to have their retirement in,  they are hardly members of the 1%%. If our government would allow us to remove our money from them without penalty most would probably do just that. At less than 1%% interest from the bank maybe not.  Both results of our government manipulating the economy, just like housing.
Kinda of funny a past president wanted to take SS and Privatize it. What would have been worst the Wall street guys or our own reps stealing it  ??
Ummm no...a bubble created by the Obama adminstration. It's titled "quantitative easing". Look it up. The feds are printing money to buy more debt and prop up the stock market. It's going to create a nice little crash in the end.
@jimbob http://www.guardian.co.uk/business/2013/feb/24/markets-struggling-serious-drug-habit
good article, but if you think the Obama Admin. is at fault, you need to look at what administrations have done since Reagan was in office. All of our leaders bow down to the top 1%. Obama is just as bad as Bush, Clinton, Bush, & Reagan. Or just as good if your Wall Street.
@Bob42263Â @jimbob
Our national debt as percentage of GDP. Reagan was the first peace-time president to accelerate our spending.Â
http://zfacts.com/p/318.html
The Dow now more than ever does not reflect the state of the economy and moreover the pain the middle and lower class continue to experience from the ongoing recession. True unemployment is ~14-15%. The corporate fat cats keep getting fatter for sure!Â
But We have created 5 million jobs?? whats the problem:)
@Linc239 Ya....right! And how many of those great jobs that have been created can support a family? I know so many people that lost a good job and now work 2-3 jobs just to make ends meet. And so many moms have gone from not having to work or just working part time to having to get a full time job. I hate those jobs reports and unemployment reports. The unemployment reports only reflect how many people have given up or their benefits have run out or they now have 2-3 jobs and don't qualify any longer. And the jobs reports don't show that anyone is any better off....ugh! And people buy into this "it's getting better" garbage!Â
@HallandOates ...I agree, except I think the market has always been like a bad employer, only interested in profit's. Unfortunitly it is designed that way.
It's a simple thing......................... The Rich get Richer.Â
I hope all the people lose all there money in the market. What a bunch of gambling idiots with way to much money handed to them, and no appreciation! Close the stock market!
@sultan1978 Viva Fidel! Say, anyone seen a transmission for a '59 Chevy on the Black Market?
Well thats harsh.. some struggling folks have thier pension tied into the market.. A lot of folks with different polical leanings. pulic and private workers.. Without leadership we all take it in the sh**ts.
Just wait....it's gonna fall even harder than it did in 2008.....don't be fooled people!
way to 'hope for the future'...nice..
@bartle_doo You hope for the future... I will be realistic!
@bartle_doo I have hope for the future...but I keep it real...I don't buy all the "everythings great" reports the media feeds us! Dig a little deeper, and even look at the jobs reports and unemployment reports that are out. Nothings getting better. People are still out of work, losing their homes and jobs. Gas and groceries, and utilities are getting higher by the day. Not to mention medical.  Also, look at the world economy....it's not doing good either. It's just going to take one major disaster or incident, anywhere in the world, to bring this market back down...it will happen...just wait.
@hopeforthefuture I hear every argument you are saying and agree that we are still in very tough times...and after voting Romney I'd hardly say I'm excited about the current regime in power...I just am prefering to do my best to see the glass half-full for once...I at least like that there's an attempt to keep interest rates low...I am DESPERATELY reaching for positives...I think the saying goes 'fake it till u make it' well, constant gloom and doom isn't going to kick-start anything..and we need it bad..
@hopeforthefuture @bartle_doo Plus, people do not realize the stock market isn't even based on any real substance anymore. It's all based on speculation, rumors, algorithms and hyper-inflated values of stocks that aren't worth a hill of beans. Sooner or later, the bubbles will burst and all the fraud created in the market will be exposed. It's coming, but no one wants to admit it.
@bartle_doo It's being realistic. Bubbles pop.Â
That and life isn't better for the average joe. The lower and middle class is still worse off than before Reagan. This is all a song and dance.
Now is the time to buy.