The Stock Market 8 Years After the Crash

Today is a significant anniversary for the markets.

It was March 9, 2009, when stocks last traded at recession lows. After months of crushing declines, the Dow Jones Industrial Average closed at 6,547.05. At that point, the markets hadn’t traded that low since April 1997.

As for the S&P 500, it closed at 676.53 on March 9, 2009. That nadir represented the lowest level since September 1996.

Eight years later to the day, the Dow closed at 20,858.19 while the S&P 500 ended the session at 2,364.87.

That’s a gain of nearly 220% on the Dow, and 250% in the S&P 500.

The lesson here for investors is rather obvious: Out of the depth of darkness comes opportunity.

Indeed, when it comes to human behavior (as exemplified by the markets), keeping your head about you … and not panicking, no matter what the circumstances … is always the right tactic.

That’s not to say that you should buy and hold. Far from it.

But in 2009, when equity values had plunged so low, it was only courage and confidence in America and the desirability of her markets that preserved one’s sanity.

That is a lesson to keep with you while in the abyss, and during times of market euphoria.

The reason why is because both extremes never last.

So, staying rational, calm and managing your investments with the utmost focus and reason is the only way to really prevail.

And, if you can apply a little uncommon wisdom in your choices, you’ll likely discover you’ll also be that much better off.

***

As for uncommon wisdom, Afternoon Edition readers have certainly weighed in of late on two of our recent topics, "Obamacare Repeal/Replace: Good Changes, or Just ACA ‘Light’?," and "The CIA Can Spy on You with Your Phone, Your Car and Your TV."

Both prompted a torrent of interesting feedback. So while the topics are hot, I wanted to present a few intriguing responses.

On the House healthcare repeal/replace proposals, many thought the plan didn’t go near far enough.

Jack writes

"Obamacare lite" … or worse. I have been very encouraged and supportive of the political and policy direction since January 20th, but this is a huge red flag. Extremely disappointing with Pres. Trump’s promises and Tom Prices’ knowledge of the ACA issues. Repeal now, then work on a new plan.

Ryan, McConnell and the Republicans have had 7 years to put a plan together, and apparently, all they’ve done is posture without substance. The necessity of a plan following repeal may well be the only way to get meaningful Congressional action. If the proposal presented 3.7.17 goes through, and the tax plan is equally anemic, this is an opportunity squandered and almost impossible to recreate. The Swamp will have prevailed.

Rich writes

It appears to do nothing to bring down the costs of healthcare. We need to restore the power to the individual, with insurance for "big items," not for every doctor’s visit. So, this looks to me like just tinkering with the ACA; it will not "fix" anything. Get the government out of my healthcare!

Fred C. writes

As far as I can see with this nonsense is they are keeping everything that adds to cost, keeping adults on parents’ insurance, doing away with exclusion of preexisting conditions and extending Medicaid at least until they get through the next election cycle.

Then, they are taking away everything that is in place to pay for the program. Taking away individual mandates, taxes on medical equipment manufacturers and taking away the employer mandate to cover their employees. The mess is just getting bigger.

Brad response: Most comments seem to feel that the House plan doesn’t go far enough, and basically is, as Sen. Rand Paul says, just "Obamacare lite." Still, there were comments that went in the opposite direction, pushing for a plan that was basically universal healthcare.

Those two polar opposite ideas (capitalism vs. socialism) are what you get when you try to create a government program that’s part entitlement, part free market … and generally unsatisfying to everyone.

***

As for the story on CIA spying, a lot of readers where rightly concerned.

Image source: wikidot.com

Robert F. writes

All this does is confirm what should be obvious. No electronic communication is safe. The more "connected" one becomes, the more tracks one leaves and the more openings are created to compromise all privacy.

And Tom J. writes

Almost scared to send this email as it may be used against me in the future. We’re heading down a dangerous road and our politicians are to blame. They intentionally divide the country over nonsense issues such as safe zones and transgender bathrooms. Meanwhile, our freedom and liberty is being eroded away at an unbelievable pace.

Brad response: I, too, am very disturbed by these spying revelations. I’m also perturbed at what I see as a lack of outrage in the nation over this issue.

There seems to be more angst about far less important social issues, as Tom J. points out, than the issue of government overreach and police state surveillance capabilities.

Indeed, on this issue, our apathy could ultimately be our most dangerous character trait.

***

Let’s keep the discussion going! If you’d like to weigh in on any of the recent issues we’ve covered in the Afternoon Edition, then I encourage you to do so. All you have to do is leave me a comment on our website or send me an e-mail.

***

The bull’s 8th birthday was a quiet affair as traders digested economic data, particularly where it comes to U.S. jobs. The broader markets pretty much played "pin the tail on the flat line," as they only closed fractionally higher across the board in Thursday’s trade. The Dow remains just below the 21,000 mark it hit last Wednesday.

• Yesterday’s red-hot ADP jobs data showed that U.S. employers hired 298,000 people in February, some 100,000 more than economists expected.

• Jobless claims up 20K, layoffs down 20%: The Labor Department today said jobless claims ticked up to 243,000, up 20,000 from the prior week. But layoffs fell 40% year-over-year, and 19% month-over-month, according to Challenger, Gray & Christmas, a global outplacement firm.

• 90% chance of a Fed hike: Tomorrow’s February employment report from the government is likely to seal the deal for a Fed rate hike to come out of next week’s meeting. And traders are betting that a hike is a near-certainty.

• Oil rout resumes: Oil slid 2% to close below $50 for the first time in 2017. This extends yesterday’s 5.4% loss after U.S. stockpiles came in four times higher than analysts expected.

• Eighth down day for gold: Since its Feb. 27 closing price of $1,258.80, the yellow metal has slid $55.60 as Fed rate-hike chatter has ramped up.

• Record household wealth: U.S. households saw their net worth gain $2 trillion in Q4 2016, bringing it to a record $92.8 trillion. Some $728 billion of that came from the late-year stock market rally.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

Your thoughts on “The Stock Market 8 Years After the Crash”

  1. Hi Brad,
    Once again, your article is very good! What you have done here is talk about how the courageous got in the market during the “abyss” of March 2009 and now 8 years later, at record all time highs, are you telling us to be courageous and get out of the market at this time of unwarranted euphoria??????

  2. Back & forth. Back & forth. Repeal and replace. Repeal & replace. What are they thinking? It’ll never work. Why are they busting their heads trying to create the most complex system in the world when there already is a good substitute.

    “Medicare for the masses.” Repeated studies have shown who is “Happy” with Medicare. Two groups: (1.) Patients and (2.) Doctors! What more do you want?

    Now there are some problems – it costs too much. But how much would it cost if instead of just covering the sickest people in America (seniors 65 and older), it covered the younger healthy masses as well? The price would plummet.

    Medicare for all. That’s where we’re headed.

  3. Brad, even if by some chance this almost a healthcare bill for Americans gets through the House and Senate for the President to sign, the only thing they will have accomplished is a litigious mess that will have the new law in Federal Court for the remainder of Trump’s term as president. You can’t intentionally engineer preferential treatment and discriminatory practices like charging older people more for the same service everyone else pays less for into a Federal Law and expect to stay out of court. Like another of your readers said: “if this thing happens then the Swamp will have won.”

  4. It never fails to amaze me how brainwashed some people are.
    Give the power back to the individual? The individual has no power. Remember divide and conquer? Would you try to play alone against a team in any sport? Why would anyone think that an individual has bargaining power when it comes to buying anything?
    The only way health care cost can be reduced is a single payer system like Medicare. So why invent something new? Just expand what is there. It has to be mandatory. Health care providers should be able to make a decent living but not accumulate riches. I do not see why a doctor should drive a Porsche or a Lamborghini. Government should remove some of the factors that cause health problems from pollution to toxic processed food. GMO should be outlawed like in Europe.

  5. With regard to the CIA hacking tools, the scary part for me is not just the privacy issue. We have known for years, at least since the Snowden revelations, that we are being spied on. The scary thing is that they can take control of our computers, televisions, and especially our smartphones remotely, and that apparently those tools are now in a variety of hands, not just the CIA, or even government agencies.

    How many people use their smartphone to make payments? Does it scare you that a variety of third parties might now be able to make payments or transfers through your smartphone, which would be debited from your account? I don’t KNOW that this is possible, but it certainly seems likely, given what has been revealed.

  6. what goes up must come down and up again and down again etc. etc. etc.
    but human memories are short and ‘panic mode’ is the order of the day. denial is at its strongest because 99.9999% of the people on this planet live in denial in their daily lives.
    ‘don’t confuse me with the facts, my mind is made up’. and so the world of people bumbles along arguing, fighting, cheating, lying etc.etc. to gain a foothold on their existence, such as it is. any peace loving, insightful person can only watch and wonder.
    stock market? a miasma of gobbledegook. cheers, ron

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