08 September 2020

The Last Five Years Of The Dow Jones Industrial Index

I am well aware that the S&P 500 and other broader market indexes are more representative of the U.S. stock market as a whole, but they tell the same basic message as the Dow and have less impact on popular opinion and political sentiment.

In my humble opinion, the stock market is still grossly overvalued and is certainly due for at least a correction (i.e. a 10% drop from its most recent peak). The pandemic has created Great Depression level rates of unemployment, GDP contraction, loan defaults, rent non-payment and business failure, and international trade shrinkage. This is not just confined to small businesses. And, we are not out of the woods yet. This poses a threat to big business equity that the market is underestimating.


Dave Barnes said...

As someone who is fully invested in stocks, I just hope that the market is up in 5 years.

Anonymous said...

Stock market is up because it offers at least some long term protection against inflation. Interest rates are close to zero and the fed is printing money like no tomorrow - eventually this funny money era will end with runaway inflation. Get out of bonds and bank deposits, don't invest in assets that are not backed up buy anything tangible.