A Monumental Day for Stocks
Monday, September 21st, 2009
By Michael Lombardi, MBA for Profit Confidential
— by Michael Lombardi, CFP, MBA
On Friday, quietly, without much fanfare, with no major business newspaper picking the story up, the Dow Jones Industrial closed at a new high for 2009, bringing the world’s most widely followed index to a 52.5% advance from its low on March 9, 2009.
In broad terms, and talking on average, any stock you would have bought on March 9, 2009, is up 50% today. The year 2009 is proving to be a banner year for stocks so far, with some stocks doing exceptionally well, up in the hundreds of percentages.
As I have written in this column over the past year, once a stock market index takes the type of dive the Dow Jones Industrial Average took from October 2007 (when it hit a high of 14,164) to its 12-year low of 6,440 in March 2009, the market stages a rebound that recoups about half its loss. The exact number for the Dow Jones to recoup 50% of the difference between its 2007 high and 2009 low is 10,302. Please mark that number down — it is the next target for the market.
Friday, when the Dow Jones hit a new high for 2009, it was a monumental day for stocks in general, as the Dow Jones is now up a healthy 52.5% from its 2009 low, confirmation for me that a breakout by the Dow Jones over 10,000 is closer at hand. Stocks are now at their highest level since October 2008.
Just imagine the Dow Jones at over 10,000 again. There will be dancing on Wall Street, singing in the White House. The worst for the stocks and the economy will seem behind us. And, more
importantly, all those investors (and there are plenty of them) that missed the stock market’s advance this year will join the party and get back into stocks, pushing stocks even higher (and that’s when trouble will set in once more).
For now, my dear reader, all we can do is enjoy the stock market’s advance while it lasts. Hopefully this article’s prediction (of a 50% recoup of the market’s loss) has guided you well. I’ll do my best to guide you back out of the market when I believe the time is right. For now, enjoy the gains!
Michael’s Personal Notes:
While 2009 is shaping up to be a great year for the stock markets (although we still have that traditionally difficult month of October to deal with), investors would have done well this year of they were invested in a variety of commodities as well. Crude oil is up 54% for the year, gold bullion is up about 13%, silver is up 47%, platinum is up 41% and the biggest winner of them all, copper, has gone up 100% this year — a double. The year 2009 has been a boom year for commodity stocks. As you know, I’m still bullish on gold and believe that there is quite a lot of life still left in the metal and in quality gold stocks.
Where the Market Stands:
Will this be the week the Dow Jones Industrial Average gets over that very important psychological 10,000 level? Well, we are only a diminishing 180 points away. This market has come a long way. From the fearful days of March 2009 when the Dow Jones traded at 6,440, the Dow is up 52.5%. For the year, the market is up 11%. Stocks have proven to be a good place for investors to be in 2009. While the advance is undoubtedly getting tired, the trend remains our friend. And for now that trend is still upward.
What He Said:
“There is no mixed signal about this: Foreclosures in the U.S. will continue to rise, the real estate market will get weaker, and the U.S. economy will get weaker. Smart investors should seriously consider unloading their stocks of consumer-products companies that produce nonessential goods.” Michael Lombardi, PROFIT CONFIDENTIAL, March 12, 2007. According to the Dow Jones Retail Index, retail stocks fell 51% from the spring of 2007 through March 2009.
Next Post: The Good Stocks Have Already Gone UpPrevious Post: Awakening Credit Markets Could Also Mean the Return of Risk
Tweet
Sign Up for PROFIT CONFIDENTIAL and
receive a FREE copy of our exclusive report:
"A GOLDEN OPPORTUNITY FOR STOCK MARKET INVESTORS"
We respect your privacy and
will never share your e-mail address.
Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
