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Dow closes worst year since 2008


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Yup the US economy is fixed, NOT!!!!

The new year couldn't come soon enough for many investors.

U.S. markets finished 2015 mostly in the red: The Dow was down 2.2%. The S&P 500 ended the year down 0.7%. It was the worst year for those two indexes since markets collapsed in 2008. http://money.cnn.com/2015/12/31/investing/stocks-market-end-of-2015/

 

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mikewright

But hey, the Nasdaq went up 5.7% in 2015!

 

Unfortunately it's a fact of life that the share market will not go up every year. Ask any long-term investor. Despite the screaming headlines,  a 2.2% drop over one year in the Dow Jones, and a  0.7% in the S&P 500, is nothing compared to drops in prior years. If you really want to see a bad year for the Dow, look at the 18.94% drop in 1966 or the 27.57% drop in 1974.  Or even the one-day drop on September 19, 1987 of 22.6%. 

 

The fact that the Dow's worst year since 2008 has been only 2.2% is pretty encouraging.

 

If you look at how things have gone since the GFC, it gives some perspective. The Dow Jones has risen from 8,086 in January 2009 when President Obama took up office, to 17,425 in December 2015.  That's an achievement many countries hit by the GFC could only wish for. Work out the average yearly gain, and things won't look too bad.

 

Sure wish the Australian share market was tracking as well.

Edited by mikewright
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contraman

 

 

Sure wish the Australian share market was tracking as well.

You have not got that wish on your own :idontknow:

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cebubird

Seems it is about  THREE THOUSAND (3000)higher than 2010, so if I had one of the DJI 500 stocks, I'd be really happy that my investment was worth much more than 5 years ago.

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Seems it is about  THREE THOUSAND (3000)higher than 2010, so if I had one of the DJI 500 stocks, I'd be really happy that my investment was worth much more than 5 years ago.

And what about the real cost of living? 

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USMC-Retired

Does this signal another decline or recession in the years to come.  The economy has been very stable over the last 5 years.  Nothing to write home about good or bad.  

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The stock market is highly manipulated, and a great part of that manipulation is the Fed keeping interest rates artificially low, which drives investors into the stock market. This is what keeps the market at the levels we are seeing today.

 

 If the government would stop "economic engineering" and let the free market work, you would see higher interest rates in savings, plus higher interest rates on mortgages and collateral loans.  And also you would see the stock market at much lower (and realistic) levels.

 

 By keeping interest rates low, the government is trying to make more money available to home buyers and also buyers of high dollar items (automobiles, etc) to artificially inflate those industries.  The side effect?  We have another housing bubble in effect as well as all time high credit being issued to people who really can't afford the items they are buying (ex: a $50K Dodge pickup financed for 80 months).

 

 It's just a matter of time before the next burst and stock market correction.  

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Does this signal another decline or recession in the years to come.  The economy has been very stable over the last 5 years.  Nothing to write home about good or bad.  

 

The reality is the economy is not stable, it's being engineered and manipulated. This is why the corrections are (and will be) so devastating,

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USMC-Retired

The reality is the economy is not stable, it's being engineered and manipulated. This is why the corrections are (and will be) so devastating,

There is my fear.  Houston is about to hit a huge recession not as big as the 80s but a recession none the less.

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Salty Dog

All I care is I still made money. Not near as much as the previous several years, but hey something is better than nothing.

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mikewright

And what about the real cost of living? 

 

Good question.

 

The average rate of inflation 2009 -2015 has been approximately 1.5% p.a.

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

 

The Dow Jones Index has increased by an average of 10.63% pa over the same period.

 http://www.1stock1.com/1stock1_139.htm

 

These figures of course are "cherry-picked" as  I have used the figures during President Obama's administration. And the CPI/Inflation rates can only give an indication of the real cost of living, as house prices for example can vary a lot from area to area.

 

For a lot of people reliant on investment income, it has not been the cost of living which has been the issue; it has been the drop in income as a result of the falling interest rates following the GFC. People whose income depended on bank interest rates have been particularly affected by the GFC, whereas those with blue chip share investments have tended to do much better.

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All I care is I still made money. Not near as much as the previous several years, but hey something is better than nothing.

 

Yes. I made lots of money prior to 2008 and saw a lot of it wiped out.  We are in the same predicament right now, it's not a matter of "if", it's a matter of "when".   Just like the casino, at what point do you bail before the bubble breaks?

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mikewright

 

 

It's just a matter of time before the next burst and stock market correction.

 

Exactly. Can't recall the exact figures, but I think most financial advisers advise their clients to expect negative returns every 5 to 7 years in a balanced investment portfolio.

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Salty Dog
:sarcasm:
 
A stockbroker is a person who helps you buy or sell shares, which represent ownership in a public corporation. The stockbroker works for a brokerage house. A stockbroker is one of several professions called middlemen. This means they stand in the middle, between you and what you want to achieve. Without this middleman, you'd never get there: That belief is the is the basis for the entire profession.
 
Insurance agents are also middlemen, but your insurance agent is not calling you on the golf course to tell you it's urgent that you dump your current policy and buy a different one today. Car salesmen are middlemen too, but they never suggest you sell a car you don't own and buy two more with the proceeds.
 
Stocks used to be represented by certificates. They were ornate and beautiful. Paper certificates might be counterfeited, but you could hold them in your hand. These days, stock is in "book entry form." There is no book, there is no entry, everything is in the computer.
 
Brilliant! so you just get on the Internet and type which shares you want to sell and which you want to buy, right? No; only your stockbroker can do that. You need him.
 
Most critically, your stockbroker has his pulse on the stock market and on the national economy. He can not only tell you what stocks to buy but knows exactly when you will get the best price. He is right just about half the time. When you follow his advice and buy a stock at what turns out to be the cheapest price all year, he will let you buy him a beer. When you spend much more than you had to--or sit there listening to him talk about a company's fine management instead of putting in your order, as the ticker shows the price going up and up--well, he has excuses. More excuses than a politician who promised to step down after eight years, when it's year number eight. Study his skill if you are a married man. You can learn from him.
 
In view of all of the above, and the fact that your stockbroker will do no better than you could do for yourself (if you were allowed to), the stockbroker's most important attribute is his ability to manipulate you. That now is the time to buy, or that now is the time to sell, or that you should do things for no other reason than that now is the time, and that in the face of your portfolio's meltdown, that you shouldn't get emotional with him, because only he can steer you away from the rocks.
 
Gambling is another thing that you cannot do alone but must do in a casino. But imagine if the casino had a "registered representative" following you around, steering you toward specific slot machines, and telling you you'd never win unless you put those coins in right now.
 
We can see that the stockbroker is an agent you couldn't do without.
 
Speaking of persuasion, some large brokerage houses call him an "account executive." He's no executive. He's a bleepin' salesman. Yes, he "executes" things, such as legal documents, just as you "execute" left and right turns on your way to meet with him.

 

Although you are required to use a brokerage house--it is the ISP of the stock-exchange Internet--"discount brokers" are now emerging as an alternative to stockbrokers. Indeed, with them you can go to a Web site and buy and sell stocks yourself, during the time between 9:30 a.m. and 4:00 p.m., so that, in theory, human beings are there to review your transactions and tell you NOT TO GO THROUGH WITH THAT TRADE because it's not in your interest....Yeah, right.
 
Discount brokers run the risk of giving the investing public the impression stockbrokers do absolutely nothing for the investor except provide an external whipping boy when he invests in a company that turns out to have tons of PCBs buried beneath the parking lot at corporate headquarters--and even then, though you can yell at the stockbroker, you can't get your money back. Being willing to be yelled at after the inevitable screw-ups, is the stockbroker's real, irreplaceable function. And he does it all with perfect smoothness, even though in the back of his mind, all stockbrokers are thinking the same thing: I need a new scam.
 
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mikewright

Yes. I made lots of money prior to 2008 and saw a lot of it wiped out.  We are in the same predicament right now, it's not a matter of "if", it's a matter of "when".   Just like the casino, at what point do you bail before the bubble breaks?

 

It's a brave man who believes he can time the share market. But just looking at the DJI, a person who invested all his money in a Dow Jones Index Fund at its peak in October 2007 when the Dow Jones Index was 14,164, (the highest the indexed reached pre-GFC) would have seen his investment increase, as the Dow Jones Index is now 17,425.

 

Not a great return, but a higher average return than fixed interest from a bank.

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