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The best stock market gains in six years
Tuesday, March 31, 2009
Now that stock trading for the month of March has come to an end on Wall Street, the final results are being hailed as the best performance by equities in more than six years.
It's kind of hard to reconcile that headline with the stories below it...
More importantly, how does the March performance look in a broader perspective? You have to dig a little bit to get that answer. For the month that "comes in like a lion and goes out like a lamb", the Dow rose 7.7 percent, the Nasdaq gained 10.9 percent, and the S&P500 was up 8.5 percent.
Naturally, the sorely lacking context here is that March followed six of the worst months in stock market history and all three indexes are still underwater for the year, down 13.3 percent, 3.1 percent, and 11.7 percent, respectively.
3 comments:
are investors going to get a cruel april fools joke tomorrow?
The resilience of the market is astonishing, like the much vaunted consumer who kept on buying despite obvious signs of economic meltdown. Investors have been trained by thirty years of one-way trades. They even seem to have integrated the Dot-com collapse into their pysche; they probably look at the Nasdaq and "know" that is must rise back to 5000.
In addition to the false beliefs, there is the overwhelming confidence that the Government will bail everyone out. This confidence may be well placed. It is more than likely that S&P components will unfairly and disproportionally benefit from the bailout, representing a massive transfer of wealth from the nation to a few wealthy shareholders and bankers. It is therefore rational to buy up the market rather than sit on dollars or houses, both of which are still doomed.
Every bad headline reassures the market that the government will act. Every good headline (mostly bad news deftly spun, it seems) re-affirms the belief that the bailout is working.
I keep hearing that the crisis is over. I keep insisting that it has not really gotten going yet.
March will disappoint. April will disappoint. May will disappoint. etc. S&P down to 450 by the end of summer.
Burn down Wall Street. Burn down Washington. Burn down Main Street. Send everyone back from whence they came and hand the place back to the Native Americans. It's the only thing to do.
I think the obvious conclusion to take from this is that happy days are here again. So, spend it up!
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