All Blog Posts from Econwatch

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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I should have expected the massive stock market rally - after all, at the end of March, I had heard that the guy who I consider one of the great "contra-indicators" (let's call him "Mr. Wrong") was predicting a steep decline to Dow 5000. Before you brush aside that notion as nonsense, remember that at that time, we were still worried about the implosion of the financial system.

But when I heard that Mr. Wrong was predicting massive riots in the streets and falling equity prices, I forced myself to consider the bull case for stocks. I had made the mistake of betting against massive liquidity once before - in 2002-03, I remained underweight in risk assets for too long and paid the price. I'm pretty sure that Mr. Wrong is making the same mistake and here's why: there still remains deep pessimism over the recovery and the stock market.

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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Today is the 22nd anniversary of "Black Monday," when the Dow Jones Industrial Average fell 22.6% in one day. Over two decades later, people are waking up to another form of Black Monday - one where we are asked to make sense of the mind-blowing compensation that Wall Street garners, while Americans are still feeling glum about the economy.

By the way, if you're one of the glum, check out this great segment from Colbert Report - see if you can spot The Financial Decoder!

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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What could be better than talking about Dow 10,000 with CBS Evening News pros Katie Couric and Anthony Mason? Answer: NOTHING!



In prepping for the segment, it was clear that some recent trends reinforce an old truism of investing: people often chase performance. Of course it doesn't make sense, but somehow it feels more comfortable to buy after markets have already gone up.

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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The Dow Jones Industrial Average came within 70 points of breaching 10,000 yesterday. Whether it's today, tomorrow, next week or next month, it's worth noting what got us to this place and more importantly, what you should do now that we're here. I spoke about Dow 10,000 with Maggie Rodriguez on The Early Show this morning.

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This post by John Keefe originally appeared on CBS' MoneyWatch.com.

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The Dow at 10,000. Does it mean anything? It may be just fodder for financial writers: a Google search that also specifies September 2009 returns five million results. But it could be that the Dow Jones Industrial Average at 10,000 coincides with some extreme in valuation, and is a "destination" for the market. Otherwise, it's just a number, like one of those small, frequent mile markers that tick by on the interstate.

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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I have confidence in sunshine
I have confidence in rain
I have confidence that spring will come again
Besides which you see I have confidence in me

-from The Sound of Music (music by Richard Rodgers, lyrics by Oscar Hammerstein II)

Ah, if only life were a Broadway musical!


Despite predictions of increasing consumer confidence, the Conference Board reported this morning that Consumer Confidence dipped in September. The numbers weren't terrible (53.1 in September from 54.5 in August), but analysts had predicted that confidence would actually increase to 57. That would have helped build on the theme that the economy is getting less bad, which is good, so now we can celebrate!

Not so fast - consumers are hip to that old story. It's true that we're all quite pleased that the economy didn't enter a ten-year depression - that explains why confidence numbers have doubled since hitting the "Armageddon is coming" low in February. But for every piece of "the worst is over news" that is reported, here's what most consumers are facing as the evaluate the economic landscape:

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With all the hoopla around the one-year anniversary of Lehman Brothers' plunge into bankruptcy (we need a Miss Manners consult to determine the correct gift to honor such an event), what has really changed in the lives of ordinary Americans?

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Two perennial corporate titans are being replaced on the world's best-known Wall Street barometer.

Dow Jones is pushing out newly bankrupt automaker General Motors and financial giant Citigroup from its industrials index in favor of Cisco Systems and Travelers Companies, Inc., respectively.

The move will be effective June 8 and reflects the two companies' turbulent recent history.

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Financial planners and writers love to assure skittish investors that, no matter how bad the stock market looks right now, share prices always go up by 10 percent or so in the long run.

A Yahoo Finance columnist assures us that since the 1920s, "stocks returned an average of 10.5 percent a year on investment." A New York Times article in 2005 says "money invested in the Standard & Poor's 500 has delivered a return of 10 percent a year on average," or 12 percent with dividends. Bloomberg News estimates the S&P 500 has a "long-term average of 9 percent to 10 percent."

Monday's news that the Dow Jones industrial average fell 4.24 percent in one day to 6,763 calls into question those reassuring assumptions -- which many investors have relied on to fund their retirement.

Let's look at some rough numbers: In March 1969, the Dow Jones industrial average was hovering around 920 points.

Adjusting for inflation implies an index level of around 5,300 in today's dollars, or something like a 28 percent gain over 40 years.

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