DOW: Close to 14000

[Deleted]

Has anyone noticed how close we are to 14000 (this whole week, but it's up this morning and inching closer).  The market since 2007 is really incredible.  In fall 2007 it reached just over 14000, and then dropped to 6600 in 2008.  I think it's fascinating that we're almost back to 2007 levels, but the mood of the country is very different.  I wonder if there growth in the market is somehow artificial since hiring/unemployment hasn't been dramatically affected.

[giantsgirl]

The DOW has more to do with the financial health of companies and companies have learned how to do more with less people over the last few years. I look at my company and I am amazed. Volmes, sales, revenue and margin are higher than ever, yet we are still being challenged with head count reductions.

[sweetnsour]

Does anyone think it would be worth moving money to a fixed fund and then back over after the stock market dips again? I know it is a gamble but it seems highly likely that it will dip down soon. I am still seeing companies laying off and not a whole bunch of hiring.

[Deleted]

13999.89!

[Deleted]

And 14001!

[Deleted]

<)

[Deleted]

I think at our age it is crazy to go out of the market. Hedge, sure, but not
move money out.

[aspentosh]

Ditto v, since I can't do smileys at work (insert crying smiley...).

[Deleted]

Feb 1, 2013 11:08:35 GMT -5 @gypsy said:

can someone break down what 14000 means?

[Deleted]

Feb 1, 2013 11:08:35 GMT -5 @gypsy said:

can someone break down what 14000 means?

It means that we're back to 2007 levels.  The highest the dow has ever been is 14093.  In 2008 it dropped to 6600 - a 50% drop in less than a year.  And now it has fully recovered.  It's one sign of economic growth - although certainly not the only one.

[Deleted]

Feb 1, 2013 11:08:35 GMT -5 @gypsy said:

can someone break down what 14000 means?

Gypsy- it means investors view the value of companies as being as high now as they were before the recession hit; public companies are making money for investors. Ironic given unemployment; as someone said above, this basically means companies have recovered much faster than the labor force because they have become more profitable (either because they learned to generate comparable revenue with less cost, including employees, or low interest rates, etc.). One could say it points to a greater divide between rich and poor, and it is related to that but maybe not precisely.

[Deleted]

I also find this ironic giving the impending sequester which, if it happens, will likely hurt the DC market - one of the very few that has been relatively insulated in the economic downturn.

[definitelyO]

YAY! there was just a blurb on my morning talk show that talked about however the market goes in January or how the S&P goes in January is how it will trend the rest of the year....

[Deleted]

Feb 1, 2013 11:18:17 GMT -5 BirdGirl said:

I also find this ironic giving the impending sequester which, if it happens, will likely hurt the DC market - one of the very few that has been relatively insulated in the economic downturn.

I anticipate another very large drop if the sequester happens.

[sillygoosegirl]

I've put some of our mutual fund purchases on hold. Approaching record highs makes it feel like not such a great time to be buying. Trouble is, I don't really know what I want to invest in instead. Probably energy improvement for our home and maybe some extra travel... I guess.

[IIOY]

Feb 1, 2013 11:18:17 GMT -5 BirdGirl said:

I also find this ironic giving the impending sequester which, if it happens, will likely hurt the DC market - one of the very few that has been relatively insulated in the economic downturn.

I think we are seeing some irrational exuberance here.  Some of the enthusiasm is warranted - economic indicators are indeed improving - but much of it is grounded merely in hope.  While I don't discount the impact of optimism on the market, we still have a fundamental employment problem.  Unemployment hovers between 12 and 15 million people, depending upon how you calculate it, and many of these people are the long-term unemployed, meaning entry back into the market is going to be that much more difficult for them.  Moreover, the jobs that are being added to the economy are of the minimum wage variety.  The only industry showing a consistent and substantive uptick is construction, which is bitterly ironic.

So no, I won't be dumping my cash into the market today, and yes, we are going to slump if the sequester takes place.

[Deleted]

My husband just sent me this, by the way, which I think is interesting (though not exactly surprising):

According to the Federal Reserve, the wealthiest one percent of Americans own 52 percent of all directly owned, publicly traded stocks in the United States. The top 5 percent own 82 percent of directly held stocks.

[cjeanette]

Feb 1, 2013 10:46:27 GMT -5 sweetnsour said:

Does anyone think it would be worth moving money to a fixed fund and then back over after the stock market dips again? I know it is a gamble but it seems highly likely that it will dip down soon. I am still seeing companies laying off and not a whole bunch of hiring.

Which can make them more attractive to investors and allows for higher dividends to be paid.

My short answer is it is never a good idea to try to time the market. A long answer would need to know what your goals are for that money and how long term you are staying invested.

[Deleted]

Wow!

That's not counting mutual funds and ETFs, though, right? Since those are safer and less risky, I would guess most middle/upper middle class people with money in the market have more in mutual funds/ETFs than direct stocks.

[kateross]

Feb 1, 2013 12:00:21 GMT -5 v said:

My husband just sent me this, by the way, which I think is interesting (though not exactly surprising):

According to the Federal Reserve, the wealthiest one percent of Americans own 52 percent of all directly owned, publicly traded stocks in the United States. The top 5 percent own 82 percent of directly held stocks.

This little tidbit will make my husband gloat.  I told him he was crazy with the theory that there's about a 100 individuals who control the stock market.

[Deleted]

Feb 1, 2013 12:03:18 GMT -5 @totsintosa said:

Wow!

That's not counting mutual funds and ETFs, though, right? Since those are safer and less risky, I would guess most middle/upper middle class people with money in the market have more in mutual funds/ETFs than direct stocks.

I assume this is response to V, and yes I think you're right.  I'm not surprised.  Our FP discourages ownership of individual stocks because of the risk and the transaction costs.

[Deleted]

Feb 1, 2013 12:03:18 GMT -5 @totsintosa said:

Wow!

That's not counting mutual funds and ETFs, though, right? Since those are safer and less risky, I would guess most middle/upper middle class people with money in the market have more in mutual funds/ETFs than direct stocks.

Nope, only direct stocks.  I'd imagine the 52% for the 1% makes a lot of sense because of officers and executives of companies holding a lot of their own companies' stock.  I'd be really interested to see what percentage of direct stocks are owned by the Forbes 400 -- I bet it is a relatively high percentage.

5% (by income at least) gets us into households earning around the high $100k range, right?  I don't think I'm all that surprised that threshold and higher would own so much of the stock, for the reason you state but also because for those people below that threshold IRAs and 401(k)s etc. may be a large part of their investment portfolios and those would very likely be funds too.

[Deleted]

Feb 1, 2013 12:07:06 GMT -5 BirdGirl said:

Feb 1, 2013 12:03:18 GMT -5 @totsintosa said:

Wow!

That's not counting mutual funds and ETFs, though, right? Since those are safer and less risky, I would guess most middle/upper middle class people with money in the market have more in mutual funds/ETFs than direct stocks.

I assume this is response to V, and yes I think you're right.  I'm not surprised.  Our FP discourages ownership of individual stocks because of the risk and the transaction costs.

Yes, it was. I should have quoted!

I would be interested in the percentages of stocks that are owned directly by that top 1% or 5% and the percentage of stocks that are in mutual funds.  If the mutual fund percentage is high, it might paint a different picture.  The quote v posted could be misleading.

[kershnic]

I would think the stock portion of all those middle class retirement funds would be included in V's figures.

[kershnic]

I would think the stock portion of all those middle class retirement funds would be included in V's figures.

[Deleted]

Feb 1, 2013 12:19:49 GMT -5 kershnic said:

I would think the stock portion of all those middle class retirement funds would be included in V's figures.

But the "stock" in my retirement funds is held almost exclusively in mutual funds.

[Deleted]

Feb 1, 2013 12:20:40 GMT -5 @totsintosa said:

Feb 1, 2013 12:19:49 GMT -5 kershnic said:

I would think the stock portion of all those middle class retirement funds would be included in V's figures.

But the "stock" in my retirement funds is held almost exclusively in mutual funds.

Yeah, I don't think that would count as the "directly owned, publicly traded stocks" that the figures were talking about.  My ETF/mutual fund shares aren't directly owned by me, right? 

[Deleted]

Feb 1, 2013 12:20:40 GMT -5 @totsintosa said:

Feb 1, 2013 12:19:49 GMT -5 kershnic said:

I would think the stock portion of all those middle class retirement funds would be included in V's figures.

But the "stock" in my retirement funds is held almost exclusively in mutual funds.

It's held *exclusively* in mutual funds.  I don't know any retirement fund that allows direct investment. 

I think your point is an interesting one.  And I wonder if the original figures are a % of all directly held stock, or a % of stock ownership as a whole - those could be very different #s with different meanings.  Regardless, though, the control issue is an interesting one - and one that really relates more directly to direct ownership since you can't control the ownership in mutual funds. 

[kershnic]

I read wrong, sorry, you're right.

But in light of this I'm not at all surprised. The other 95% just don't have the money to take those risks.

[theintended]

Not exactly what you are looking for, Tosa, but a more complete picture (albeit with 2007 figures)



(Graphic from the Institute for Policy Studies)