Another Depressing Day for Stocks

October 27, 2008

Another 2.4% decline of the Dow Jones Industrial Average today left the per annum advance from December 13, 1961 at 5.27%. U.S. consumer price inflation over that long-run period of nearly 47 years averaged 4.34% per annum, so the Dow’s real rate of incline was only 0.89% per annum. Investing for the long run is no guarantee of success. Timing really is everything. Earlier today in Asia, Japan’s Nikkei lost another 6.4%, and equities fell by 12.7% in Hong Kong, 12.3% in the Philippines, and 9.5% in Thailand.  The implosion of wealth is overwhelming fiscal and monetary measures to stimulate growth. Talk that the global economy will start to mend in the second half of 2009 looks unrealistic. The Fed’s target rate is heading for Japanese territory, that is 0.5%  or below, and rates in Europe have considerable downward ground to cover in a hurry.

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