The Dow index is not representative of the market. It is the oldest index, but “the Dow counts every stock equally. Many people on Wall Street say this makes the Dow less valuable as a market barometer.” It only represents the 30 most safe stocks, so the fact it is hitting records is not necessarily a sign of strength.
“the Dow rallied 20 percent during the first third of 2001 — at a time when the U.S. economy was falling into a recession.” ; – NPR
I stand by my recession call. We’re heading into a recession, led by the housing market decline. Anybody remember the housing bubble? Or did you all get swept off your feet by a few weeks of a sucker’s rally?
This is precisely why investors lose money in investing; they forget to look at the long-term picture. They get swept up in the emotion of the highs, and then they sell when it’s low.
Do you all remember why we are on piggington? We realize there’s a housing bubble, that housing drove the economy, and that the housing collapse will lead to a recession? This is a bubble economy, and the bubble is popping.
Don’t be fooled by this rally. The stock market loses an average of 28% heading into a recession, starting the decline by 1 – 2 quarters before the recession starts. That should make it Q3 06 – Q1 07 for the decline to start, so any day now…
