Have you noticed that the Dow is getting close to the 10,000 level? There's a lot of talk -- and excitement -- on Wall Street about Dow 10,000. I'm prepared for the big day. I've dusted off my Dow 10,000 baseball cap. It's now a faded shade of navy blue with "Dow 10,000" embroidered in white on the front. I'm ready to wear it when the time comes.
I got the cap back in March of 1999 when the New York Stock Exchange gave them out to mark the first time the Dow Jones Industrial Average closed above 10,000. To be precise, the Dow closed at 10,006.78 on that day -- March 29 -- with a gain of 184 points.
The mood was euphoric on the floor of the Exchange. It was an exciting day in the markets. Crossing 10,000 was a psychological milestone in Wall Street history. More importantly, Dow 10,000 represented a sign of prosperity for Americans and the U.S. economy. As NYSE's then chairman, Dick Grasso, told Nightly Business Report on that historic day, "This is an extraordinary time not just for the New York Stock Exchange, but really for all Americans because today with Dow at 10,000 there are 70 million Americans who are participating directly in the equity markets."
But when the Dow gets to 10,000 this time, I don't think we will feel as exuberant. The economic statistics today, compared to 1999, are downright dreary. Ten years ago unemployment stood at 4.2% versus 9.4% now. In 1999 the economy was growing at 4.8% versus negative 1% in the second quarter of 2009. Gold prices were $286 an ounce compared to roughly $945 today. And the U.S. dollar was much stronger back then too.
Don't get me wrong. It's great that the Dow has bounced back from its low of 6547 on March 9th this year. But with nearly 7 million Americans out of work and millions of others suffering from huge losses in their 401ks and retirement plans, I think it's too soon to uncork the champagne and celebrate.
Comments
The ....DOW, has ....NOT bounced back !
The DOW was bounced back, by a false manupulation of the market by the federal government, Goldman Sachs, and The FED.
As we stand with this stock market, the DOW is 50% ahead of the US economy, and every time the DOW tries to correct, it is bounced higher.
The question then is when will the DOW fall to a PE that is equitable to the economy ?
Answer, when Goldman Sachs wants the DOW to fall , and not one moment sooner.
...!
Let's hope 3rd time(in the up direction) is a charm and we never see 10K again after that. Whoever paid for the hats sure got their money's worth!
Too bad a NY District Judge is trying to undo all the healing in the still fragile banking industry. If it's illegal to yell fire in a crowded theater why would it be legal to cause a run on a bank? An interestingly timed letter last year by Schumer about Indy Mac comes to mind....
I am not sure that if the Dow breaks 10,000 again that it wont fall below that level again. Earning forecasts are being met by cutting costs, not growing sales. Unemployment is still on the rise. Maybe we have pent updemand but is it really growing when unemployment is rising? Maybe the market was beaten down to much in the first place last fall and this sping? Mortgages are still falling behind, yet mortgage applications are still on the rise (I don't know if those applications are being approved or not). To me I don't see many reasons why this market keeps on rising, and I consider myself optimistic....
What am I missing?
Jeff
I agree with the other comment that I would feel more confidence investing if the market held its ground into next year. There would be cause to celebrate if you put all your money into the DJIA when it was at 6547, though. I know, there's no perfect way to time the market, unfortunately.
I still have the gold I bought all those years ago. Back then the metal brokers were pitching it as insurance against the Y2K apocalypse. I guess they weren't completely wrong.
Hi Susie,
I am from Canada (Toronto) and this market shows that even if one missed the market its like you missed nothing! It's like an old soap opera which you have not seen for years...within a few minutes you picked where they left off!
Your show is a lot better than the stuff CNBC puts on. The talking heads there seem to have a lot of thoughts on the economy and often cut the guest off if they are not on the same page as they are. This last down turn seemed to make them more humble, but as the market goes up so does the self-confidence.
cheers.
Did you wear your hat backwards on October 6, 2008 when the DOW passed 10,000 on its way to 9,955?
I'm not so concerned about 10,000; I just hope we can maintain this 9,500 range through the end of the year. Some of the experts are still saying the market is looking at one more 10% or so drop. Staying between 9,400 and 9,800 for four or five months should restore confidence. There's a lot of money sitting out there in low yield fixed vehicles that's just waiting for a place to go.