Dow turns positive for year: Erases 2,000-point plunge

[RandySF]

The Dow turned positive for the year on Thursday, erasing a scary start to the year that at one point had the index down as much as 1,974 points in just the first three weeks of 2016.

The remarkable rebound has been driven by a spike in oil prices and fading fears of a possible recession in the U.S. Oil has returned to $40 a barrel and the U.S. economy continues to grow, despite the global slowdown.

But just a few weeks ago the markets were in full meltdown mode, with many predicting the bull market was on its death bed.

"That marked the zenith of panic. The market traded to extremely oversold conditions," said Peter Kenny, an independent market strategist. "Since the lows we've seen the market rally in stealth mode. Those who panicked got punished."


http://money.cnn.com/2016/03/17/investing/stocks-positive-2016-dow-jones-oil/

[RepubliCON-Watch]

1. I still think that...

A crash in 2016 is inevitable given the instability in the global market and the excess amount of junk bonds floating around out there. The oil prices shouldn't be seen as the major indicator of a near recession.

[Recursion]

3. I don't think you understand what a "junk bond" is

Because high-income debt instruments (that, incidentally) are basically impossible to find and that's making a lot of investors annoyed.

[SheilaT]

2. People here are constantly jonesing for a crash.

I suppose it's because none of them have any money whatsoever in the stock market. No 401k. No mutual funds. Nothing at all.

I'll admit to having money in the stock market, and I'm very happy to see this rally. I am often beyond irritated when people enthuse over a falling stock market. My savings are invested in the market. I'm retired. I'm collecting Social Security. I have a tiny pension -- tiny because the company, USAir, was able to declare bankruptcy and abrogate its responsibility to its retirees so my pension is one third of what it should be. Without the stock market doing well I'd be totally fucked.

So I'm very glad at this current upswing in the market.

[AgerolanAmerican]

4. the market represents the wealth of the 1%

The vast majority of the stock market is owned by a tiny handful of individuals. When it goes up and down the fortunes of that tiny group are far more affected than that of everyone else, even factoring in things like 401ks and mutual funds.

Rooting for the market to go up is essentially rooting for the 1% to become wealthier relative to the rest of us than they already are.

And that is part of the reason why many expect a crash. The other part is, after the extreme levels of fraud and manipulation that have come to characterize the financial system, a crash would provide an actual reality check and expose truths long hidden about the real state of affairs in this country.

[whatthehey]

5. So the tens of millions of us

who have a lot of money by our standards in that same market can just be laughed into poverty because yoiu want to see those tiny few who have much more mildly inconvenienced, eh?

What else should the shrinking middle class keep their retirement savings in? Banks that pay less than even the official inflation rate? Gold with the Beck loons (who have seen a far more consistent bear market than equities lately)? US bonds that to marginally exceed inflation must be locked in untouchable for more than a generation? If we buy rental properties we are seen as evil. Few have the skills and risk acceptance to succeed in small business. We cannot according to you invest in equities without being cheerleaders for the Romneys and Kochs. So let's pretend some distant relative dies and leaves you with a net worth of $50k or so. What, o pure one, is the class-solidarity and yet effective investment vehicle we should choose?

[AgerolanAmerican]

7. Well, that's exactly it

"What else should the shrinking middle class keep their retirement savings in?"

It is because interest rates have been held at absurdly low levels for so long that traditional methods of saving for retirement have been replaced with gambling on the stock market.

In a normal, non-hyper-financialized economy, every saver can beat inflation through simple savings - no investments, no risk-taking required.

In this current f-ed up economy, every saver loses ground every day when garnering no interest on savings against a backdrop of constant inflation.

The answer to your question is: savings accounts, and similar rock-solid, 100% safe investment vehicles. Not the high-volatility stock market which has crashed twice in the past 20 years and is due for another one soon.

[melm00se]

6. Unless of course

you have a pension (they are heavily invested in the stock market).

[SheilaT]

9. While the 1% owns a large percentage of that money,

pretty much anyone who has a 401k has money in the stock market. I have a decent nest egg, variously invested, and I depend on income from that money to keep me going. SS is about 1/3 of my income, exactly what it's intended to be, rather than the lion's share of income. And I'm not all that unusual.

Maybe you will do just fine in retirement on just SS -- the average amount is something like $1300 a month these day. Don't know about you, but I couldn't possibly live on that amount. Oh, I have a pension. It's one third of what it ought to be thanks to my former company declaring bankruptcy a couple of times and getting completely out from under its obligation there.

Thank you so much for wishing devastating poverty on us.

[AgerolanAmerican]

13. Seriously?

"wishing devastating poverty on us"?

Is that really sincerely what you think my point was?

[SheilaT]

14. It certainly feels that way.

"In a normal, non-hyper-financialized economy, every saver can beat inflation through simple savings - no investments, no risk-taking required." is wrong. Savers can never beat inflation. Invest only in bonds and not stocks and you will fall behind.

Stocks return an average of 10% per year, although almost no year is average. Year to year stocks can be quite volatile, but that 10% holds up over time. Passbook savings at a bank pays essentially nothing these days, and has been paying nothing for at least ten years. Meanwhile there is still inflation eroding those savings. That erosion makes a mockery of your contention that savings accounts are rock solid 100% safe investment vehicles. Meanwhile, even though the stock market has dropped significantly at various times, it has always roared back, building up to new highs. Sure, there will be future crashes, but if you hang in there for the long term -- and I've been in the market for some 40 years now -- you will do far, far better than just putting your money under a mattress.


If you honestly think you can save enough money to fund your retirement, go for it. But the harsh reality is that it is almost impossible for simple savings to do the trick. Investing in the stock market, not day trading, not reaching for huge returns, just investing in some good mutual funds, that will do the trick. Unfortunately, too many people look at short term volatility and panic. In the fourteen years I've been on DU I've read thousands of posts glibly predicting the market will totally crash, and almost as many gleefully anticipating a crash. Yes, the markets go up and down, but the overall trend is up, and up well ahead of inflation.

Here's a link to one of the very many sites that show this. http://www.businessinsider.com/range-of-annualized-stock-bond-returns-2014-11

Here's another linkhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
This one compares both rates of returns and what the compounded value of $100 invested in the stock market and in bonds. The Great Depression was very hard on stocks, but after that there is simply no comparison. Even in down years, someone who had been totally in stocks is far ahead of someone totally in bonds. Good investment advisor suggest a mix of stocks and bonds, a mix of what kinds of funds or stocks to be in.

[Orrex]

10. That's probably part of it, yeah

And for that quite sizable portion of society, the up and down of the stock market has no real bearing on their current or future lives. At most, it might have some indirect impact upon their company's bottom line or the health of the CEO's portfolio, but so what? Companies fire people--excuse me--I mean companies right-size people all the time, and a shaky stock market is seldom if ever the primary cause.

Realistically, the average non-investor is going to be hit harder by the whims of corporate greed than by any blip in the DOW. The endless need to fellate the shareholders drives more decisions than the number at the closing bell.

Further, the non-investor class is more or less sick to death of the incessant scoldings they receive over their scandalous failure to help puff up the stock market. When someone is living check to check (and an extraordinarily large number of people are forced to do so), then they can't afford to buy $5000 or $500 or even $50 worth of shares each month.

I rather suspect that some of the "jonesing" you perceive is a result, in part, from that frustration.

YMMV. You certainly got screwed by USAir, but I'm not going to lecture a person who lacks the income or risk tolerance needed to play the market shell game.

[SheilaT]

11. A serious stock market crash

always results in a lot of lost jobs. So those who have no investments, no retirement fund of any kind, no pension, should actually be rooting for the market to go up. And in the long run it does.

And while I understand truly needing every penny of income just to manage, I'm often amazed when I read stories about someone who had a six figure income, never saved a penny, and has lost the job and winds up on the street. Perhaps I'm the only person in North America who when I started having a decent income, and it was NEVER even close to six figures, started saving the excess.

We are completely immersed in a culture that encourages buying and mindless consumerism. TV is of course the worst here. And the fact that however often it is that there's some new electronic gadget that people are told the must have. It's very hard to ignore those messages.

[Orrex]

12. Good points, all

If I'd contest one point, I'd offer that "serious stock market crashes," the ones with major lasting impact, seem to happen every decade or so, while corporate whims destroy jobs every chance the get. On a smaller scale, to be sure, but in practice the average victim of the economy has more experience getting screwed by their employer than by the NASDAQ.

As for your comments about six-figure paupers, I agree completely. Also, I hate to sound cold, but I have no sympathy for such people. Even a paltry annual income of $100K is more than most people in the country can even dream, so it's hard to weep when someone at that level suffers from over-spending or a lack of planning. (Not talking about natural disasters or medical emergencies, of course!)

And your last paragraph is spot-on. Our culture can imagine no problem that can't be solved by more consumer spending. It's a bizarre and toxic mindset that continues to cause a great deal of harm.

[B Calm]

8. I'm still approx $25,000 less than where I was at last June.