Tuesday, February 3, 2009
Another Bad Month for SP500
During the past month of January, the SP500 has droped over 8% and became the worst January in the history of the index. Based on the very poor economic reports and huge numbers of job losses, nothing is unexpected. GDP numbers looked better than expected, but when you look at the details, you must find that we will see worse situation than we can see the better. Housing data is bad and indicates that we will have a long way to go before we see any good sign. With three more banks going belly-up on Friday, the banking sector in stock market will see floods of sells… With the payroll losses of around 500,000 and an increase of unemployment rate to 7.5%, no one can forecast that the mood of consumers will turn around, especially with estimates of the possible unemployment rate over 9% later this year. This disappointed January already tells us that the financial crisis is far from the end, we may have to prepare the very bad situation ahead, hope not another DEPRESSION.
Subscribe to:
Post Comments (Atom)
The economy news is a great blog topic. Thanks for the good articles.
ReplyDeleteFoster,
ReplyDeleteThere was a good column in Sunday's San Diego Union Tribune's business section by Dean Galbraith. He wrote that if you were to draw a historical line of the stock market from way back until the late 80s, before the stock market shot up out of control, the correct valuation of the Dow would be about 6,000 right now. Since in any correction, there is a tendency to overshoot, he believes it will drop to 5,000. Furthermore, he said if the problems of Eastern Europe are not worked out next month, Western Europe will be in much worse trouble then we are, dropping the Dow by September or October to 4,000. Then obviously, if he is correct, the time to invest long-term is when the Dow drops anywhere to under 6,000. For more short term gains, one would be better off to wait and see if it drops to 5,000,