Stock Market In Longest Funk Since 1970s

[babylonsister]

Stocks Tarnished By 'Lost Decade'
U.S. Shares in Longest Funk Since 1970s;
Credit Crunch Could Prolong Weakness
By E.S. BROWNING
March 26, 2008; Page A1


Over the past 200 years, the stock market's steady upward march occasionally has been disrupted for long stretches, most recently during the Great Depression and the inflation-plagued 1970s. The current market turmoil suggests that we may be in another lost decade.

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.


A look at stocks during downturns

The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday, below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc. For the past nine years, it has fallen 0.37% a year, and for the past eight, it is off 1.4% a year. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.

Until last fall, many investors had viewed the bursting of the tech-stock bubble as a nasty but short-term setback. The market had resumed its upward march, reaching new highs in October. Then the credit crisis began weighing on stocks, as did the possibility of a recession. By March 10, the S&P 500 was down 18.6% from its Oct. 9 record close, nearing the 20% decline that signals a bear market. It has rebounded since then amid the Federal Reserve's efforts to stabilize the financial system, but it remains 13.3% below its October record.

Conventional stock-market wisdom holds that if investors buy a broad range of stocks and hold them, they will do better than they would in other investments. But that rule hasn't held up for stocks bought in the late 1990s or 2000.

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http://online.wsj.com/article/SB120649226977964203.html?mod=todays_us_nonsub_page_one

[Orrex]

1. Quick! Make the tax cuts permanent, before it's too late!

And then bail out the multi-billion dollar multinationals that can't keep their shit together.


Otherwise, all is lost!

[DJ13]

2. The markets are only in a funk because the gov. wont let them correct

Neither stocks, nor the profit margins of the companies they represent, can go up forever.

Much like a forrest there has to be a clearing out by a natural disaster to foster renewed growth.

Our government inserted itself into that process after 9/11, and now they are continuing to intrude during the present credit crunch, and its interrupting the natural progression that creates healthy markets.

Allowing corporations to fail, even large corporations, increases the chances for improved business conditions later on for everyone else.

Keeping crooked, failed corporations alive by government intervention fails to provide the needed lesson to other corporate entities to prevent future instances of fraud and bad business ethics.

Its nothing but welfare for the investment class.

[slackmaster]

3. That works in my favor in the long run

About 10 more years of work ahead, and at the moment 18% of my gross goes into my 401k.

(It's good, IF I have a job.)