We needed 7200 – Dow falls to 11 year low
Every news station on TV now features a “Watching the Dow” in the right hand corner of the screen. We’re becoming as interested in the daily movements of Wall Street as we were to changing gas prices on the corner of every street. Anyone who was unfamilar with the stock market a year ago is now seeing the Dow drop of every second of the day. It would be hard to find someone who still thinks the markets are doing well.
Its like with each day the markets are taking a glance even further back. Today the stock market plunged to the point that we touched 11 year lows. To reiterate, the Dow has not touched a level under 7200 since 1997. 1997!
To put that in perspective, one dollar in a Dow Index fund invested in October 1997 would be worth a whopping $1 today. Zero return, 11 invested years. No progress.
We like to say that Japan had a lost decade and we’re already seeing ours. The boom leading to the tech bubble is falling out, it’s like we’re paying for two bubbles at the same time. A real estate bubble and a general asset bubble.
I can’t get over the idea that eleven years of growth in the stock market is worth nothing. Keeping your investment in nickels (the coins) would have proven a better investment than putting your money in the stock market.
Its impossible to put this into perspective but the best way would be a comparison. The current drop is now about 50% from the top. During the tech bubble and 1970s oil crisis the bottom was just over 40% from the top. The depression, at this point in months of recession, was near 45% though the market ultimately bottomed at a 90% drop.
There’s no predicting this market.
It’s enough to scare anyone who’s been following the traditional plan all their life. This event, now more than ever, is show just how important financial education is.