During the month of January, the Dow Jones Industrial Average dropped by 5.3%, the
S & P 500 by 3.6% and NASDAQ slid by 1.7%. That’s quite a change from the outstanding returns of major U. S. Stock Markets in 2013, when the S & P 500 grew by nearly 30 percent. What has happened with U. S. Stocks since Year-End?
Keep in mind that the Markets never go straight up…or straight down. Many people forget that U. S. stocks stumbled several times last year, partially due to rumblings of the FED easing-off its bond-buying stimulus (“Qualitative Easing”), projections of China’s Economy, and other Developing Markets, slowing-down and the various episodes of saber-rattling in East Asia, the Middle-East and Africa. Stock Market Fundamentals are still good.
During The Great Recession, the Investors who were hurt the most were the ones who panicked, and totally abandoned Stocks and moved the funds into money markets and CDs. You know how that Strategy has worked out.
There is one continuing problem with the Economy, however, that is not going away–Income Inequality. As I have noted several times before, the U. S. Economy is traditionally composed of three different components: Consumer Spending is, by far, the largest at 70%, with spending by Businesses and Government making up the rest. As corporations benefit, at the expense of their Employees, their Business Plans are basically operating on Smoke and Mirrors. I will soon address this Corporate Welfare in another Blog Post.
NOTE: Just this week, the FED confirmed that it will reduce its bond-buying (“QE”) , in February, from $75 Billion to $65Billion, thus adding to the market jitters.