The Stock Market, Perspectives From 2002

914 words - 4 pages

It is believed that it will be very difficult for many investors to come to terms, and that returns will be quite modest into the foreseeable future in stocks. Why? Because according to the Wall Street Journal, more than half of all stock investors began investing during the 1990s, a time of unprecedented stock market strength. From 1995 through 1999, the Dow industrials averaged a gain of 24.7% a year and the NASDAQ composite averaged a 41.9% annual gain. Most investors have wrongly come to view such enormous gains as normal. The indexes have never before been able to sustain gains like that and, we doubt, they ever will in most of our lifetimes. Many would argue that recent dramatic downfalls in markets are due to events of 9/11. However, we have also seen that fall of giants on accounts of accounting frauds have been the results of falling off their own weights.
Many investors have embraced the concept of stocks doing well over the long term. Yes, stocks do well over the long term. However, a closer evaluation of the stock markets performance shows most of the good returns are delivered during super bull markets, like the one that late 1990s! A closer look at the stock market's historical performance shows long periods of stagnation. Historical trends shows that the market peaked in 1929 during the Great Depression, it wasn't until 1954, 25 years later, which the market recovered to its 1929 highs.
For many investors who just started investing in the '90s and/or who are not old enough to remember the long-term performance of the stock market, it is now time to tone down their stock market expectations.
Based on the recent events and other historical performance trends it is suggested that investments in stock market are dangerous unless diversified with some non-stock market areas. It is absolutely critical for investors to diversify their portfolios with non-correlated investments to the stock market that can potentially capitalize in a sideway, bull or bear stock market environment
In addition to many aftermath of 9/11 and prolonged market bubbles, there are two new developments in the making, which can have quite negative consequences for the stock market, namely the weakening of the U.S. dollar and a significant pullback of foreign investment in the U.S.
We need to ask ourselves a question, whose answer we'll probably be very surprised with: What percentage of dollars have foreigners invested in the stock market over the past few years as compared to all U.S. mutual funds? If our guess was 25% or even 50%, we were incorrect. The answer according to The Wall Street Journal is closer to 95%
It should not take a genius to see why foreigners could continue to avoid the U.S. stock market. U.S. stocks are consistently down so far this...

Find Another Essay On The Stock Market, Perspectives from 2002

A Study of the American Stock Market

1757 words - 8 pages from the English stock market, which during the early years was the biggest of all markets. Not until America won its independence was a stock exchange considered in the new world. Since its inception the American stock exchange has played a vital role in the success of this country, while at the same time also causing some unforeseen and devastating problems for both the businesses involved and the country and world as a whole. An analysis of the

The Stock Market is a Necessity

2091 words - 8 pages The system of buying and trading shares or stocks has been done around the world for hundreds of years. From the merchants of Venice, to the coffeehouses in Britain, trading shares has been done everywhere. America has become the world center for trading. The New York Stock Exchange (NYSE) is the world leader of trading, located on historic Wall Street. Wall Street is a commonly used term referring to the stock market. Thousands of corporations

The Stock Market Crash of 1929

910 words - 4 pages Jones Industrial Average, the stock index showing the status of America’s economy, quadrupled during the 1920s. Speaking of the stock index, since people had more money to spend, Americans became investors in stocks. Many people invested in stocks on margin, where investors paid part of the total price (usually 10%) and used borrowed money for the rest. A large inflow of money from investing on margin came to the stock market and stock prices

Cause of the crash in stock market

2367 words - 9 pages , 2000. From September of 2000 the NASDAQ dropped 45.9% to 2291.86 by Jan 02, 2001. In Oct. of 2002, the NASDAQ dropped as low as 1,108.49 which is 78.4% drop from its all-time high of 5,132.52 in Mar. of 2000. A total of 8 trillion dollars of wealth was lost in the market decline.2. Causes of the Crash in 1987So, what were the causes of the stock market crash of 1987? Many stock market analysts believe that the crash was set off by a number of

The Stock Market Crash of 1929.

915 words - 4 pages the stocks plummeted. It left them with nothing. And as if losing all their money in the stock market crash wasn't enough, they went into even more debt because the money that they lost wasn't even theirs in the first place. It was the banks' that they borrowed the money from. Now, they had no way to pay the banks back. These days left America in poverty. This crash led to the fateful years of the Great Depression.The stock market crash of 1929

The Stock Market Crash of 1929

1346 words - 5 pages standard is when the value of a country’s money is tied to the amount of gold the country possesses. Anyone who was holding that country's paper money could present it to their government and receive an agreed value from that country's gold reserves. The stock market crash didn’t only affect the United States but it also affected foreign countries. The first country to be greatly affected was England. England’s economy was one of the strongest most

Stock Market Crash & The Great Depression

2207 words - 9 pages ". The next two days the stock market was much calmer. It was up a bit on Friday and down a little on Saturday. People became optimistic, knowing that the market could bounce back from Thursday and that the bankers had stepped in to turn the market around.On October 28 history was made. It was referred to as "Black Monday." The U.S. stock market triggers declines in markets around the world when it falls 22.6%, the highest one-day decline in U.S

Stock Market Crash as the Cause of the Great Depression

1201 words - 5 pages market began to gradually slide. On the afternoon of October 24, 1929 the great American stock market took a bottomless plunge. Investors finally realized the "stock boom had been an over inflated bubble." Margin investors were being ruined because stock holders tried to pay back debts. By November of 1929, the Dow sank from 400 to 145. In three days, the New York Stock Exchange removed over 5 billion dollars worth of share values. By the end of the

The Reasons Behind The Stock Market Crash of 1929

1390 words - 6 pages with inflated income from rampant consumerism, the stock market seemed like the ideal way to earn money (Aaseng, 27). At the time, people could make up to $90 000 in a matter of weeks (Aaseng, 31)! The demand for stocks rose and their prices, along with those of consumer goods inflated well above normal. The potential for disaster in the stock market was especially high because many uninformed investors who had unrealistic expectations saturated

The Stock Market Crash Began the Great Depression

1531 words - 6 pages to sell all they owe; a sign on a car says “100$ will buy this car, must have cash, lost all on the stock market.” (Christie 19). This explains that the only money people could get was from the things of theirs they sold. In addition, too many people were selling their stocks, so the prices should have been even lower. October and November, during the beginning of the crash, the stock prices grew so low that the “Dow Jones Index said in two

Comparing the 1929 Market Crash and the Current Position in the Stock Market

1478 words - 6 pages each other's businesses. Now, thousands of years later, we trade stocks in companies, not for the sake of owning them, but because we want to obtain profits from our original stock prices. Right now, it is almost impossible for people to see how strong the international commodity markets are. Our parents and cousins and friends, everyone's ears are pinned to what goes on in the market every day of their lives. We need to start teaching more

Similar Essays

The Stock Market Essay

1077 words - 4 pages The Stock Market The stock market plays a significant role in the health of the economy; the economy has to be strong for a country and its citizens to prosper. In 1929 over a period of two weeks 30 billion dollars disappeared from the U.S. economy, this was the event that started the greatest period of human hardship of the twentieth century known as the great depression. On October 19,1987 the Dow Jones industrial average plunged almost

The Stock Market Crash Essay

962 words - 4 pages “There were no smiles. There were no tears either. Just the camaraderie of fellow-sufferers. Everybody wanted to tell his neighbor how much he had lost. Nobody wanted to listen. It was too repetitious a tale” (The New York Times, World History Book). The stock market crash was only one of many contributions leading up to the Great Depression. There were many economic and societal conditions that worsened throughout this time. Luckily

How The Stock Market Crashed Essay

952 words - 4 pages stock. At this time there were no effective legal guidelines on the buying and selling of stock (Kindleberger 199). Free from legal guidelines, corporations began printing up more and more common stock. Many investors in the stock market practiced “buying on margin,” that is, buying stock on credit. confident that a given stock’s value would rise, an investor put a down payment on the stock, expecting in a few months to pay the balance of the initial

The History Of The Stock Market

1099 words - 4 pages efficiency allowed trades to be made internationally and computer networks have allowed exchanges to connect to eachother. Such technologies however do have a downfall if any computer hacking is occurred. In 1987 the stock market experienced a brief but major crash. Other countries however have had periods of decline. In Tokyo from 1989 to 1990, the Nikkei index of the company TSE dropped almost 50 percent. They eventually rose back up after 1990