Flagpole wrote:
Remembering that the markets are forward-looking, note that the S&P 500 hit a low of 752 on Nov. 20. Right NOW it is at 904. That is about a 20% increase since then. The DOW had hit 7,400 and is right now at 8,800. That is also about a 20% increase.
Still lots of volatility perhaps (and likely), but there could also be a slow steady rise. Who knows? If it's a slow and steady rise, too many people who are waiting for that right time to enter the market will just be lulled into non-action. By the time they finally feel like getting back in, the DOW will be above 10,000 -- a far cry from the low of 7,400, and too late to take advantage of this super low market.
Of course maybe the DOW will drop to 5,000 as a handful of "experts" have predicted. Again, who knows? This is why you don't try to time it.
Bad news exists still, and I can see it, so don't try to paint me as all good news and no bad, but lets look a the GOOD news:
1) Mortgage applications are up higher than they have been in 5 years.
2) Those filing for unemployment benefits dropped below 500,000 when that big of a drop was NOT expected.
3) Unemployment is still below 7%.
Those who have said housing drives the economy may have been proven right, and if they are indeed right, with the mortgage applications going up and rates and prices at super lows, that should encourage more to buy a home. When that housing crisis ends and the Treasury bubble bursts (and both will happen) then the market will again move northward and the unemployment rate will drop.
For those of you who continued to buy stocks when the DOW was at 7,400, congrats. Those purchases will be worth a ton when you are ready to retire (assuming that's at least 10 years away).
Here's hoping you big financial gains in 2009.
- Flagpole