Nobody is going to tell you to get out now because if the stock market recovers substantially youll blame him or her if you follow the advice. If financial planners and spokespeople like Suze Orman, or financial analysts in the media got you in, stop listening to them theyre not going to help you or get you out. Orman is paid for talking, not trading or making investments, shes not much better than mutual fund advertisements, and its going to be interesting to see how those funds choose to account for and gloss over their dismal performance in the coming years. I already screamed sell, sell now, you fool months ago but you guys want those comforting and familiar faces lying to you or reassuring you of things they cannot possibly know. They werent aware of the threat of TBTF and they only believed the stock market went up over the long-term because thats all they saw in their sales careers. But some investors are doing a calculation and reasoning that their portfolio has lost twenty percent or eight percent for the year or perhaps lost that amount over a ten to fifteen year period (if one was fortunate enough to have some above average gains to help buffer the decline over the last year or so) and those investors are exiting the market and will put what is left of their capital aside for use in more productive ventures when they arise. 7,470 in the DJIA (Dow Jones Industrial Average), represents a fifty percent decline from the peak during October 2007. The previous bear market bottom was Oct 9, 2002 when the DJIA was at 7,286. The DJIA has recently dropped below that level and at 7,100, we not only fifty percent below the October 2007 high of 14,198.50, but some DJIA or S&P 500 investors that held long-term may consider it as forfeiting fifty percent of the twenty seven year move from the start of the bull market in 1982 to yesterday.If an investor in 1982 bought and held securities, fifty percent of the gains that had accumulated for retirement during that time have evaporated. At the current level (Tuesdays close) of 6,726.02, there may not be established support
Ive already discussed my feelings in other posts on the DJIA returning to 3300, which is where the index was in 1993. Of course, the index has changed since then, as did the S&P 500 as companies are removed and replaced by the selection committee (sometimes due to changes in the business environment, such as mergers or acquisitions). The index is not a uniform comparison to what it was in the early 1990s or 1980s so Im only referencing it as a guide.Dow Industrials 1982 – 2009
Dow 30 S&P 500 NASDAQ 100
Date Close % Change Close %Change Close % Change
Close 04 10,783.01 1,211.12 1,621.12
Close 05 10,717.50 -0.60% 1,248.29 -3.10% 1,645.20 1.50%
Close 06 12,463.15 16.29% 1,418.30 13.62% 1,756.90 6.79%
Close 07 13,264.82 6.43% 1,468.36 3.53% 2,084.93 18.67%
Close 08 8776.39 -33.84% 903.25 -38.49% 1211.65 -41.89%
30-Jan-09 8,000.86 -8.84% 825.88 -8.57% 1,180.25 -2.59%
6-Feb-09 8,280.59 3.50% 868.6 5.17% 1,277.49 8.24%
13-Feb-09 7,850.41 -5.20% 826.84 -4.81% 1,236.85 -3.18%
23-Feb-09 7,114.78 -9.37% 743.33 -10.10% 1,128.97 -8.72%
27-Feb-09 7,062.93 -0.73% 735.09 -1.11% 1,116.99 -1.06%
Year to Date 7,062.93 -19.52% 735.09 -18.62% 1,116.99 -7.81%So the markets indices at year-end were roughly -34% to -42% in 2008. Those of you with mutual funds lost a bit more due to management fees. The DJIA and S&P 500 are down nearly 20% for the year (of course were only a little over two months in for the year).Other market components: