DJIA: Net negative from 2000 peak

I’d still rather have the economy we have now than the late 70’s early 80’s. Remeber odd and even days? But the warning signs are ominous.

I agree with you that gas prices should be higher (whether by market or govt intervention). Like a Saudia Arabian once said: “We didn’t move out of the Stone Age because we ran out of stones…”

I agree that the ecconomy in general doesn’t seem that bad, but gas is rediculus.  I’m a conservative free market guy, but when speculators are buying up to 60% of the oil production and becoming a major cause of the inflated prices, there’s something wrong.

I agree that we need fuel alternatives, but me paying $600 a month for gas isn’t making electric cars.  For the life of me I can’t see why people think inorder to get alternative fuels gas has to be expensive.  We certainly didn’t get out of the stone age because rocks got too expencive.  We left the stoneage because Bronze worked better.

I have a small pickup, I get ±25mpg and I paid $70 for friggen gas this morning.  But hey as long as we get electic cars my kids don’t need to eat this week, that’s cool.

Funny.

The charts I see show that the DOW is higher today then it was on 1/24/2000.  How is that lower?

Anyway, my personal stocks have averaged 17-21% since 2000, so I really don’t see it.  Furthermore, we have had an increase in GDP every quarter for at least the past two years, so recession is a myth there.  Housing sales were up last quarter.

Not to be political, but I think your entire premise is colored by your political affiliations and leanings and not really based in what is actually going on in the markets.  I’m not saying we’re in Pax Romana or that this is the best market since the 1980s, but let’s get realistic here, this is not the worst economic climate in history.  Unemployment is around 4-5% not 30%; prime mortgages are very stable; mutual funds and stocks are doing decently, if not stellarly, the GDP has gone up every quarter I can remember (AKA the economy is GROWING, not shrinking).

If anything, I think the Fed needs to increase rates dramatically to halt inflation.  That’s what people are REALLY seeing out there.  The Dollar is down in value because there’s too much money out there.  So jack up the prime rate to about 8% which will jack up savings account interest rates, money market accounts, CDs, bonds, etc which will help people decide to invest (aka take money OUT of the market and thus make it harder to get dollars) which will deflate the dollar a little and restore stability to prices.

Then end the silly ethanol experiments and build some gas refineries so we can drop the price at the pump which in turn will reduce the costs of goods and services and bingo, we may just have a Pax Romana environment.

BTW, a recent report from the US Department of Labor said that even though unemployment went up, business’ labor expense stayed pretty stagnant.  Their theory is that the increase in minimum wages caused employers to fire employees to both meet the laws and stay profitable.

Maybe dropping those requirements, from an economic standpoint, might result in less unemployment (which is currently lower than the unemployment rates in Europe, Asia and Africa mind you) and result in more people having more money which they can spend on more goods and services?

Just a thought.

@ncscswitch:

It is official sports fans…

After 8 1/2 years from the Dow Jones Industrial Average peak of January 2000, we are at a net negative loss.

Man…if we could find out how to get a positive loss we’d be doing great!!!

Exaggerating much:

The Dow fell as much as 313.79, or 2.66 percent, to 11,498.04, well under its 2008 trading low of 11,634.82, and its lowest level since September 2006.

http://www.heraldextra.com/content/view/271679/18/

The Daily Herald, a major news publication, not a blog.

Also you report the 2000 record HIGH, which was in early January.  You are clearly omitting the FACT that just 3 months later the DOW dropped more than 600 points in a single day resting at 10,300

14 April 2000
Biggest points loss in history, with the Dow shedding 617.78 points or 5.66% to close at 10305.77

Far lower than today, far, FAR lower.

Source: http://news.bbc.co.uk/2/hi/business/145986.stm the BBC, hardly a blog, it is a major media outlet.

Further more, you are clearly twisting the tale to portray the message you want portrayed.  That’s fine, but the readers need to know you are utilizing yellow journalism tactics to make an economic commentary and that you are not portraying a true comparison of apples to apples.  You did, however, almost chose the value correctly for 12/31/2000, you were only off by 1000 points, it was actually 10,700 not 11,700 as you reported, and to be perfectly fair, we would have to wait until trading ended on 12/31/2008 to make a fair comparison between this year and 2000.

Dec 27, 2007 … John Prestbo is editor and executive director of Dow Jones … On 12/31/2000 the DOW was 10786.80

www.marketwatch.com/…/story.aspx?guid={C6A63CA3-DF20-4C03-957B-EC248D1342D8} - 161k -

Also interesting is that 2000 saw the first calender LOSS in DJIA since 1994, two losses in the same decade, but the people seem to have considered the 90’s a very good economic time regardless of the 6% drops in a single day AND the net loss of all assets twice in under a decade.

but the market seemed far worse because the Dow sustained its first calendar-year loss since 1994, falling 6.18%.

http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=2000
Dow Jones Indexes

In summation:

12/31/2000 the DJIA was 10,787
6/27/2008 the DJIA was 11,347
(Source: http://www.marketwatch.com)

Comparing those two years, the DJIA actually GREW, not LOST as the original post portends.  The actual growth is pathetic, but it was not a loss by any definition.  The actual GROWTH RATE was 560 points, but bear in mind, that’s only comparing the end of 2000 with the most recent date in 2008.  I’ve been unable to find the actual close amount for 6/27/2000.

It may be easier to find a figure on July 1st than June 27th from 2000 just due to the fact that nothing special happened that summer, it was very slow recovery from the MASSIVE financial damages of February, March and April and the year ended significantly below where it peaked on Jan 14th of that year.

@ncscswitch:

And unlike previous downturns, this time we are going in with personal debt at levels that would have been unimagined in the stagflation era of the 1970’s (mortgages back then were often smaller than what many folks carry as credit card debt today).

Honestly, I’d like to see the prime rate go up about 7 or 8 points in the next 4 years with a possible +8% increase in taxation to accompany it.

A)  My money would grow tremendously because of the new higher rates being paid everywhere AND my debts are so incredibly low with fixed interest rates that those wouldnt change much.

B)  We could possibly deflate the dollar and make it worth 10 Euros so when we got wise, we would be in an extremely strong position to bargain with foreign nations

C)  With taxes and interest rates so high, foreign companies would have a very hard time selling their products here forcing us to develop our own domestic manufacturing again AND because rates are so high, it would be foolish for illegals to move in, since it would be cheaper to stay where they are.

But to say 2008 was worse than 2000 is just ignoring the facts.  What was it Hillary once said?  to believe that would require “a willing suspension of disbelief” ?

@dezrtfish:

I agree that the ecconomy in general doesn’t seem that bad, but gas is rediculus.  I’m a conservative free market guy, but when speculators are buying up to 60% of the oil production and becoming a major cause of the inflated prices, there’s something wrong.

Why do you think speculators are buying up oil? Maybe they know something the rest of us already know: the dollar is in the toilet, demand for oil is going up, supplies are limited. It’s easy to blame speculation for the cost of oil, but the real problem is much more intractable.

I agree that we need fuel alternatives, but me paying $600 a month for gas isn’t making electric cars.

you just answered your own question. If an electric car cost you $300 a month, wouldn’t you buy it? Why do you think billions are being spend by GM and Toyota on electric and fuel cell cars? Do you think they would be doing this if gas were still at $1.50 a gallon?

For the life of me I can’t see why people think inorder to get alternative fuels gas has to be expensive.  We certainly didn’t get out of the stone age because rocks got too expencive.  We left the stoneage because Bronze worked better.

Altnerative fuels ONLY become practical when gas becomes expensive. Let’s imagine you’re trying to start a company and picthing an idea to some investors: I can make an electric car that costs $20,000 and gets 60 MPG. Probably not a hot idea when gas was $1.50. Now it’s a VERY GOOD investment with gas about to hit $5 a gallon. Are you really so ignorant that you don’t know that the high cost of a commodity spurs innovation? When’s the last time you saw a steam engine train or paddle boat?

I have a small pickup, I get ±25mpg and I paid $70 for friggen gas this morning.  But hey as long as we get electic cars my kids don’t need to eat this week, that’s cool.

If your financial situation is that desperate, you have only yourself to blame. I’m guessing you do like the rest of us: less road trips, cut back on non-essentials (latte, HBO, turn up the thermostat a couple degrees, etc.). Gas prices suck, but I’m not exactly looking at starvation in the face. Me thinks there’s a little hyperbole going on here…

@Cmdr:

Exaggerating much:

The Dow fell as much as 313.79, or 2.66 percent, to 11,498.04, well under its 2008 trading low of 11,634.82, and its lowest level since September 2006.

http://www.heraldextra.com/content/view/271679/18/

The Daily Herald, a major news publication, not a blog.

Also you report the 2000 record HIGH, which was in early January.  You are clearly omitting the FACT that just 3 months later the DOW dropped more than 600 points in a single day resting at 10,300

14 April 2000
Biggest points loss in history, with the Dow shedding 617.78 points or 5.66% to close at 10305.77

Far lower than today, far, FAR lower.

Source: http://news.bbc.co.uk/2/hi/business/145986.stm the BBC, hardly a blog, it is a major media outlet.

Further more, you are clearly twisting the tale to portray the message you want portrayed.  That’s fine, but the readers need to know you are utilizing yellow journalism tactics to make an economic commentary and that you are not portraying a true comparison of apples to apples.  You did, however, almost chose the value correctly for 12/31/2000, you were only off by 1000 points, it was actually 10,700 not 11,700 as you reported, and to be perfectly fair, we would have to wait until trading ended on 12/31/2008 to make a fair comparison between this year and 2000.

Dec 27, 2007 … John Prestbo is editor and executive director of Dow Jones … On 12/31/2000 the DOW was 10786.80

www.marketwatch.com/…/story.aspx?guid={C6A63CA3-DF20-4C03-957B-EC248D1342D8} - 161k -

Also interesting is that 2000 saw the first calender LOSS in DJIA since 1994, two losses in the same decade, but the people seem to have considered the 90’s a very good economic time regardless of the 6% drops in a single day AND the net loss of all assets twice in under a decade.

but the market seemed far worse because the Dow sustained its first calendar-year loss since 1994, falling 6.18%.

http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=2000
Dow Jones Indexes

In summation:

12/31/2000 the DJIA was 10,787
6/27/2008 the DJIA was 11,347
(Source: http://www.marketwatch.com)

Comparing those two years, the DJIA actually GREW, not LOST as the original post portends.  The actual growth is pathetic, but it was not a loss by any definition.  The actual GROWTH RATE was 560 points, but bear in mind, that’s only comparing the end of 2000 with the most recent date in 2008.  I’ve been unable to find the actual close amount for 6/27/2000.

It may be easier to find a figure on July 1st than June 27th from 2000 just due to the fact that nothing special happened that summer, it was very slow recovery from the MASSIVE financial damages of February, March and April and the year ended significantly below where it peaked on Jan 14th of that year.

Your link doesn’t even reference a DJIA chart. Mine does:

The DOW hit a peak in 2000 just shy of 12,000. It just closed at 11346 on Friday. A NET LOSS over the last 8 years, as Switch pointed out. Your inability to read a simple chart makes you either retarded or an idiot.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=djia&sid=1643&o_symb=djia&freq=2&time=13

@Smacktard:

@dezrtfish:

I agree that the ecconomy in general doesn’t seem that bad, but gas is rediculus.  I’m a conservative free market guy, but when speculators are buying up to 60% of the oil production and becoming a major cause of the inflated prices, there’s something wrong.

Why do you think speculators are buying up oil? Maybe they know something the rest of us already know: the dollar is in the toilet, demand for oil is going up, supplies are limited. It’s easy to blame speculation for the cost of oil, but the real problem is much more intractable.

I believe speculators guess at what the price will be and bid that it will either go up or down.  They never actually buy the commodity.

The fact is speculators could not bid up the price of oil if supplies weren’t so tight.  Drill now, drill everywhere, that’s what I say.  Just the intention to drill will put downward pressure on the commodities markets.

@ncscswitch:

I am not trying to twist anything, certainly not “Yellow Journalism” practice.

The DJIA is DOWN more than 3% since the high I stated (as I stated I was quoting form the January 2000 high) over the past 8 1/2 years.

The simple fact of the matter is that, a good fund manager will get a 10% annual return in the market, with a DOUBLING of a given investment every 8 1/2 years.  THAT is why 8 1/2 years is a relevant amount of time, it represents the Financial Planning Doubling Rate for equities for the past 50 years.

Also investing in an Index Fund is a hedge bet that gets modest returns and is designed to slightly out pace inflation.  Obviously a DJIA Index Fund is no where close to that designed purpose since 2000.

You can parse, spin and obfuscate all you wish.  But those things do not add points to the DJIA.

When you combine these numbers with the other factors that are hitting our economy:  3,000,000 foreclosures, Core Rate Inflation at 4%, Total Inflation near 10%, rising unemployment, household income up last month ONLY because of the debt-issue checks sent out by the Treasury Department, ad infinitum, ad nauseum…  it is a REALLY ugly national economy out there.

You selected a date from a different quarter and attempted to use that date to compare to a bad day.  It’s akin to saying that Black Monday was the best day because it was higher then the next few years were.

And yes, a GOOD fund manager would and did get 10% or more per year.  I’m truly sorry you picked a bad fund manager, my fund managers have been getting close to 17% per annum since 2002 (2001 was a bad year, we had the World Trade Center and other things happening, very high unrest, I only got 7% that year, bad bad year for me.)

However, you really are trying to spin events to reflect the message you want to send.  You are not looking at the whole, but only the bits and peaces you want.  As I showed above, June 27th was hardly the worst drop in the past three decades (1994 was worse), this has not been the worst loss in the stock market (again 1994 was the worst with 6% drop in a single day, not the piddly 3% you cite), and we actually have a higher DJIA close in 6/27/2008 than we did for almost all of 2000.  January 14th 2000 was the peak of the year, the top number for that year, the epitome of the year.  You are attempting to compare it with a day you personally think is the worst.  To do so rationally and correctly, you should compare it with the BEST day in 2008, since 1/14/2000 was the best day of 2000.  If you want to compare worst days, you need to find the lowest day in 2000 then compare it with June 27th.  HINT:  It was in June as well, probably because June is historically, from what I am told, the lowest point of the calender year for the DJIA (not necessarily for SPDE or NYSE or NASDAQ etc.)

Again, sorry you had a bad day.  Honestly, I’ve been doing quite well.  My worst days were the few months after the World Trade Center and that’s because I barely did as much as the interest rate was on my mortgage.  Perhaps, instead of blaming others, you might want to think about saying to yourself “I screwed up.  I hired a bad fund manager and I need to lick my wounds and find someone else to handle my money now.”  Or you could hope that he just had a bad decade (you’ve been complaining for about a decade now in various threads throughout the years) and stick it out.

@Emperor:

The fact is speculators could not bid up the price of oil if supplies weren’t so tight.  Drill now, drill everywhere, that’s what I say.  Just the intention to drill will put downward pressure on the commodities markets.

I agree.  Why are we letting China drill 90 miles off the coast of Florida but Americans cannot?  What, Americans are going to do more ecological damage drilling than the Chinese who don’t care and have no ecological standards set by China?  That’s OUR oil they are plundering.

Furthermore, it was estimated that 2% of the world’s oil was located in Colorado.  That does not sound like a lot, but 2% is really large.

Also, had we not nixed Anwar in the 90’s we’d be getting a million barrels of oil a day out of Anwar right now. (BTW, that’s NOT in the Middle East, that’s in Alaska.  Many people I talk to think that Anwar is somewhere in the middle east, they do not realize it’s actually in uninhabited, northern Alaska.)

I am not using a specific fund.

I was referencing your cherry picking a single day which was the high for the entire year and in a completely different quarter and trying to compare it to the low day of another year.  Not a fair comparison.

If you compared January 2000 to January 2008 that would be fair.  If you compared June 2000 to June 2008 that would fair.  But cherry picking the extreme high point in all of 2000 and trying to compare it to the extreme low point of half of 2008 (we have a whole half year left, plus a couple of days at this point) is not a fair comparison - it’s yellow journalism.

Yellow journalism being defined as reporting facts and figures in such a manner to convey a message or influence the thinking of others by misleading them or leading them to false conclusions.  This is usually done by making poor comparisons, leaving out certain facts (1994 drop of the DJIA in excess of 6% but implying the 3% drop of June 27th, 2008 was the worst thing ever since Black Monday).

You are at the least guilty of the first, making poor comparisons.  And I would suspect the second as well by omitting the facts that in the 1990’s, when people generally feel the stock market was doing extremely well, there were days where the market dropped by more than 6%.  Meanwhile, you highlight a single day in 2008 where the market dropped less than 3%, but close to 3% and try to herald it as being a net negative from 2000.  It is not a net negative from 2000.  2000 ended barely into the 10,000s and we are well above that in 2008.

Now, I do get the impression, personally, that you have had a very rough time at it in your investments and this is almost surely because your advisers need to be replaced with more investment savvy investors.  My investors in 2000 were telling me to get out of American stocks and spread myself globally, I did (focusing mostly on Russia for nostalgia’s sake) and have done extremely well for myself.

After all, the writing’s been on the wall for a LONG time that the mortgages were going to pop.  Banks requiring interest only loans?  No proof of employment to qualify?  How long could that have lasted!  Same with technologies, that Y2K scam (and I was in the industry at that point, I knew it to be a total scam) totally rocked the business world when it was uncovered.  Add to that a new government administration bent on enforcing the laws and many companies (Enron, WorldCom, AT&T, Arther Anderson, Martha Stewart, etc) getting leaned on and reporting their financial figures were not honest, and what do you expect?

A good investor would have pulled you out of many of these markets long ago.  I kept some, against my adviser’s prompting, and they have done very poorly, but my other investments have been great.  Gold up.  Oil up.  Corn up.  LED Technology up.  Russian stocks WAY THE FRACK UP! (One already has gone up by 44% since January).  But some have not done so well.  American financials down.  Medical down.  Etc. (Funny, the prospect of National Health Insurance drives the price of medical stocks downward…hmm, wonder why?  But then, I’m buying it because it’s going down in the hopes that no one would be insane enough to put in national health care in which case, the stocks will rocket back up.)

Brains dude.  You have to use your own brains not the financial planner’s brains.  Assume he has none.  Check and double check everything he says (I am assuming it is a he, most men do not like to work with women when the they are working with someone in a field where they are intellectually inferior because of training, expertise, whatever.)

But to try and claim that the DJIA is net negative from a very specific point in 2000 history (BARELY in 2000 history mind you, not even a full 3 weeks after the DJIA opened after the New Years recess!) is pure yellow journalism.

In fact, the DJIA is HIGHER today than it was in 2000, a fact you seem loathe to admit.  Significantly higher, but not the 10% per annum you wish for. (Actually 8% is a more appropriate number.  Plan for 8%, hope for 10% and kiss your adviser at 12% is the rule I’ve always been taught.)  Yes, it’s been only what, about 3% per annum?  Maybe 4%?  Is inflation up?  Yes.  But then the fed’s been cutting rates for what, 12 straight quarters?  Everytime they cut the rate they add money into the economy, more money = more inflation.  Less money = deflation.  Is inflation THAT bad?  Not really.  Minimum wage went up about 70% so there’s more money in people’s hands to spend - businesses are just adjusting for the influx of cash I’d wager.

What IS bad is Eggs are up 33%, Milk is up, Gas is up 200% etc.  Now those are real problems that have real solutions. (Cut the Ethanol stipends so that ethanol is forced to compete on the world market on a level playing field; drill off the coast of Florida and in Alaska as well as other parts of the nation; end China’s status as “preferred trading partner”; build some refineries, etc.)

You want to end inflation (and I believe you mentioned it first, someone else may have, but it was mentioned prior to me) then you need to spur the Fed to raise rates.  The DJIA has no effect on inflation (other than their assets are worth less as inflation rises.)  If the Fed were to raise the Prime to 8.5% we’d see some deflation happening.  If it was raised to 17% like it was in the 70’s (or was that mortgage rates in the 17-23% range?) then we’d see MASSIVE deflation (and soup lines I’m sure!)

But no.  I refuse to buy into your argument that in Q1 of 2000, barely after the markets opened, there was a day when the market was a few points higher than in Q2 of 2008 half a year into 2008 when the market momentarily dropped below the extreme high of 2000.  Hell, at the end of Q1 in 2000 the market was flirting with going into 4 digit numbers again and had lost well over the same amount lost during all of the 1930’s and the Great Depression.

Honestly, the worst year on record for the DJIA was Jan 1, 2000 to Dec 31, 2000.  I doubt that anything, short of a 3 year old with the remote on the Fed, can give us a worse year than 2000 in our life times.  Of course, now that I’ve given the Universe a challenge, I am sure the Universe will prove me wrong.

Cite your source that it’s 8.5 years to double.

I was told 6 years, but I was told that by an economic and financial adviser who I decided not to hire.

And even if it is 8.5 years, not saying it is or is not, what of it?  You are hand picking the best day in 2000 (which is hardly representative of what really happened in 2000 which was the largest crashes in the history of the DJIA) and trying to compare it to the worst day in 2008.

That’s like comparing apples to oranges.  Yea, they’re both fruit, they both grow on trees, but really, they are not the same thing at all.

@Smacktard:

@dezrtfish:

I agree that the ecconomy in general doesn’t seem that bad, but gas is rediculus.  I’m a conservative free market guy, but when speculators are buying up to 60% of the oil production and becoming a major cause of the inflated prices, there’s something wrong.

Why do you think speculators are buying up oil? Maybe they know something the rest of us already know: the dollar is in the toilet, demand for oil is going up, supplies are limited. It’s easy to blame speculation for the cost of oil, but the real problem is much more intractable.

Read this slow so you can understand it better, when 60% of oil contracts are made by non consumers there is something broken.  That is artificial demand.  http://www.globalresearch.ca/index.php?context=va&aid=8878

I agree that we need fuel alternatives, but me paying $600 a month for gas isn’t making electric cars.

you just answered your own question. If an electric car cost you $300 a month, wouldn’t you buy it? Why do you think billions are being spend by GM and Toyota on electric and fuel cell cars? Do you think they would be doing this if gas were still at $1.50 a gallon?

No I didn’t, and no I wouldn’t.  I paid $5000 for my truck, 1) there are no electric cars that will do what I need. 2) If I have a $500 dollar car payment for a car that only uses $300 a month that is still more than the $600 I pay for gass now.  3) The money I am paying for gas is going primarily it seems to investors not AV researchers.

For the life of me I can’t see why people think inorder to get alternative fuels gas has to be expensive.  We certainly didn’t get out of the stone age because rocks got too expencive.  We left the stoneage because Bronze worked better.

Altnerative fuels ONLY become practical when gas becomes expensive. Let’s imagine you’re trying to start a company and picthing an idea to some investors: I can make an electric car that costs $20,000 and gets 60 MPG. Probably not a hot idea when gas was $1.50. Now it’s a VERY GOOD investment with gas about to hit $5 a gallon. Are you really so ignorant that you don’t know that the high cost of a commodity spurs innovation? When’s the last time you saw a steam engine train or paddle boat?

If there was a 20k electric car it available even 5 years ago, you wouldn’t be able to keep them in stock.  If is gets 60mpg its not electric its a hybred, and 60mpg isn’t very good for a hybred anyway the VW TDI gets that.  Talk about ignorant, how many cars have you owned, how many car payments have you made? aparently everyone in the world should either ride a bicyle or pay a $500 car payment.  Are you realy so ignorant to believe that every american can aford to go finance a new car so that you can get a nice warm fuzzy feeling about the environment?

I have a small pickup, I get ±25mpg and I paid $70 for friggen gas this morning.  But hey as long as we get electic cars my kids don’t need to eat this week, that’s cool.

If your financial situation is that desperate, you have only yourself to blame. I’m guessing you do like the rest of us: less road trips, cut back on non-essentials (latte, HBO, turn up the thermostat a couple degrees, etc.). Gas prices suck, but I’m not exactly looking at starvation in the face. Me thinks there’s a little hyperbole going on here…

Ah, I see, I should make myself uncomfortable for the polar bears.  Well don’t concern yourself too much with me being too comfortable in a few weeks I’ll be in Iraq doing my part to be uncomfortable.  I guess i can quit bitching about gas too, because I’ll be buying alot less in the next year, still gota get the kids to school, but the gas in my hummer you’ll be paying for ;)