Monday, January 30, 2012

The Stock Market's Resiliency

The housing/banking crisis of late 2007 to early 2009 was a devastating blow to the US economy. On October 1 of 2007 the Dow Jones Industrial Average ($INDU) was at 13,930. Then the free fall began, and by March 9, 2009, the Dow had plunged to 6,547, losing more than half of its value. But, little by little, the market recovered, taking us to today, where the Dow is 12,653, making back almost all of the ground it lost during the banking crisis. That is why experts put their faith in the power of stocks as investments. It takes time, but the market is resilient, and it does come back eventually. Many people saw their portfolios cut in half from 2007 to 2009. Those who are retired or close to retirement hopefully had a large percentage of their investments in something safer than stocks, like bonds. At the depths of the crisis of 2009, some probably got discouraged with the Dow and withdrew their investments. This is the worst thing that a person could have done. Just think about how many blue chip stocks were at bargain prices at that time. That would have been the time to buy like never before.

Since 1980, the growth of the Dow has been nothing short of amazing, when compared to the sluggish overall rise that happened during previous decades. From 1980 to today, the Dow has multiplied over 14 times! Consider these figures, showing the value of the Dow:

1-1-1930..... 267
2-1-1940..... 146
1-1-1950..... 201
1-1-1960..... 622
1-1-1970..... 744
1-1-1980..... 875
12-1-1989..... 2,753
11-1-1999..... 10,877
10-1-2007..... 13,930

How long before it hits 15,000? Stay tuned.

*Some information from

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