 | abichara (60)
11/03/2006 |  Someone got it right here! And a year earlier than anticipated. But it isn't that big of a deal. Unless if you have lots of investments in the stock market, chances are you're not really feeling the effects of the Dow hitting 12,000. But of course, the long term effects of a good stock market are obvious for some groups: for example, people who are invested in retirement accounts now at this point have more wealth for the future then they had about 5 years ago, when the market was much weaker, especially after 9/11. In other words, this is good news for baby boomers getting ready to retire. And there's also the indirect effects of people who sell their stocks to put it into other sectors, like real estate for instance.
Lets remember that the Dow reached 11,700 back in March of 2000, a time when technology stocks were very overvalued in the market. Given this fact, the Dow reaching 12,000 is a feel good indicator, but it doesn't indicate any sort of significant aggregate economic growth over the past 6 years. Other indices like the S&P and NASDAQ haven't returned to their year 2000 highs either. In short, if the Dow is only a few more points higher than it was six years ago, then that means it hasn't kept up with inflation. Prices for housing, fuel, insurance, medical care has significantly risen in the past six years, so it can also be argued that the impact of the Dow reaching 12,000 is negligible at best.
The Dow has risen steadily over the past few months primarily because the Fed has not decided to change certain policies that influence interest rates on mortgages and other financing tools. Earnings are indeed up with some companies, thus helping boost the Dow. If the Dow crashes, that will negatively influence the broader economy, but immediately speaking there are other issues that affect the cost of doing business. Interest rates affect people's ability to borrow money and spend on new projects. Health care costs, the across the board performance of the stock market, which also influences attitudes about spending, and unemployment rates, which affect labor costs are also essential things to examine when looking at the overall performance of the economy. In short, the stock market isn't the primary indicator for determining the financial health of the nation. The rate of increase in the cost of living is just as, or a more, important indicator to look at.
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 | LanceRoxas (40)
12/23/2005 | Okay I was way off last year and the market was basically flat for the year. I believe with the reduced involvement and decline in violence in Iraq over the next year some of the instability in the market will be settled- leading to higher stock prices. Growth has been good all year and net profits are up. My stock pick of the year is the same as last Veriphone (PAY) presently trading at 27 bucks a share I bought it at 15! The fundamentals are great. Earnings are good and I can see this stock taking off!
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