Monday, October 20, 2008

Dow Up 400, So Why All the Fuss?

Investors got back to doing what they do best on Monday: buying stocks.

Most US indices were up right after the opening bell and remained positive throughout the session. Meanwhile, comments by President Bush, Speaker of the House Nancy Pelosi, and Fed Chairman Ben Bernanke gave more reason for applause and exhilaration, as the government seems intent on another round of handouts to people who really don't need them, this time, American consumers.

The entire credit crunch, recession, global slowdown argument is becoming somewhat laughable or ludicrous. Surely, the US and global economies have hit a serious speed bump, but the extravagant measures taken to stave off what amounts to a little bit of pocketbook pain has been political overkill.

My understanding of the issues gives rise to a great deal of skepticism. As an empiricist, I study what is seen and I haven't seen rampant unemployment, business failures, bankruptcies, food lines or any related real-world evidence that we are in a anything worse than a somewhat mild recessionary pullback, which is a direct result of decades of easy credit.

Once again, the solution to a problem caused by too many dollars in circulation should not be solved by giving away more money. It's like stopping a cut from bleeding by cutting the victim somewhere else. The whole idea is simply beyond ridiculous.

In any case, the government is bound and determined to hand out more money they don't have, a concept with which Wall Street is apparently in favor.

Dow 9,265.43 +413.21; NASDAQ 1,770.03 +58.74; S&P 500 985.40 +44.85; NYSE Composite 6,287.60 +338.80

On the day, advancing issues once again finished well ahead of decliners, 5073-1325. New lows beat new highs, 210-13. Volume was moderate, though strong on the NASDAQ, the index which gained the least on a percentage basis.

NYSE Volume 1,226,914,000
NASDAQ Volume 2,062,091,000

For a change, commodity prices were all higher, with oil gaining $2.26, to $74.65, on widely-circulated reports that OPEC would impose an output cut at their next meeting. Gold rose $2.30, to $790.00 and silver was higher by 36 cents, to $9.69. Both of the precious metals took a serious drubbing last week.

In the short term, volatility is still quite high and will probably remain that way until after the elections on November 4. In the long run, we'll all survive - hooray! - and probably see a recovery in the latter part of 2009. Overall, however, most of us haven't changed a great deal about our daily routines, except for maybe being a little bit more frugal and cost-conscious... a pretty good idea, no matter what the economic conditions.

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