It doesn’t get much uglier than this: DJIA 6763

Posted By on March 2, 2009

DJIA slide
WSJ Online

Here’s a bright thought:  if, scratch that, when …  the economy rebounds, it most likely will rise quickly from the shocking lows we are currently seeing. The dark side is that this selloff doesn’t seem to be finding a bottom and there aren’t many confident traders ready buy stocks again.
marketsToday’s news from AIG that they lost $61.66 Billion in the last quarter not only put them in the history booksas the company with the largest quarterly loss ever, but also drove investors to sell their already pummled stocks. So much so as to drive the Dow Jones Industrial average well beneath the 7000 market to 6763 at the close of trading.

Comments

  • Jacob E

    I think we’ll be surprised to see any significant rebound. We’ll see many more companies post losses, not as extreme as AIG, but significant losses. People continue to feel the pinch in their pocketbook, high unsecured debt, high mortgages on homes they could not afford that are now worth less then they paid for them, layoffs, bank failings etc. I’m no doom and gloom kinda guy, but we’re in a world of hurt. Hopefully this slap with a 2×4 called reality will get people some perspective on their lives.

  • While I agree with you Jacob in seeing things for what they are, the market doesn’t operate in reality. I’ve been around a few downturns in the past and suspect that crashes this hard will eventually see some kind of bounce. (perhaps very slow?) I also know that we’ll still have massive debt, but believe that economist and politicians will shrink the perceived size of the debt over time through monetary policy that causes above average inflation — and no I’m not suggesting it is a good thing. Think about the infrastructure built decades ago on borrowed money (bonds, etc) — we now see that debt ‘small’ by today’s standards. I believe we’ll see that same long term view again when it comes to some of the debt we’re amassing today … inflation will make the T number what the B number use to be — unfortunately it is still really big.

    My point is that this huge addition of printed/borrowed money has to go somewhere. Washington has little problem continuing to pump it into the system and spending more. And while I don’t advocate this in government or in individuals, there will come a time when those who can afford to purchase and hold the correct equities (well managed companies) and quality real estate will see gains … and I think some will be very substantial.

    The Obama administrations’ monetary policies of pumping money into the country (inflationary) will inefficiently find its way into the economy and provided dollars that will circulate. These dollars will look for products and assets. By picking the right investments, people will see better returns than holding cash, especially when inflation rears its ugly head.

    The biggest danger I see is for those selling their stocks and mutual funds at a bottom is that they will suffer significant losses that can’t be returned by an interest or bonds style return. I fear too many will move to cash out of fear and suffer an even bigger loss if the dollar’s buying power disappears.

    We’ll eventually see some kind of a rebound … how significant and how fast … who knows? (let’s find a bottom first!)

  • Jacob E

    I’ll definitely admit that my market economics reasoning is pretty simple. Too grounded in reality to play the market shell game. 🙂 Perception definitely plays a part in the whole system. I think at this point we’re so ignorant of what a trillion dollars means that at this point it’s just a number with no real attached ‘value’. I agree with your assessment of the monetary policies and it’s inefficiencies and with the inflation that will come with ‘producing’ that much more money.

    I’m ready for the bottom too but I think we’ll see a continued rocky slip for probably the year and it wouldn’t surprise me if we break under 6k. Great opportunities to buy low but it’s hard to keep buying in when you see it falling every day. Month to month I continue to see a 1% loss even after contributing 15% of my salary to my 401k. But I still own the shares, so if they do turn around things will look a bit better. 🙂

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.