Thursday, August 4, 2011

Dow Drops, Yahoo! Finance Panics. (SALE!)

I caught the front page of Yahoo! Finance this afternoon and couldn't help but think that they were a little over the top. Here's the way it looked at the time:


I mean, 3%? Really? Is that headline worthy, in the middle of the day?

It turns out that the DOW finished down 4.31% for the day, which isn't peanuts but it isn't crash time. Or is it?

Well, the DOW is an index of multiple stocks so it takes more than a little bump to take it down 3 or 4% but it is only 30 stocks. It's not the entire market.

But here's the S&P 500, which is a bit bigger than 30 stocks:


I've boxed similar drops over the past 5 years. Things don't look rosy, but let's be real here. Isn't this just investors realizing that the government stimulus that's been masking the recession is ended and the veil has been lifted. The recent "boom" or Bull market was largely an illusion, or at least based on a fallacy of recovery.

I think the market is just reverting to where it should be, but that also means stocks going on sale!

Just don't back the truck up yet. ;-)

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