Last Friday, the three major U. S. stock indices–the Dow Jones Industrial Average, S & P 500 and NASDAQ–closed as follows: 16,459.70; 1,970.89; and 4,706.04, respectively. Today, as the smoke cleared, following another volatile week, those same indices all closed higher (on the week), at: 16,643.01; 1,988.87 and 4,828.33. I wondered how many small fortunes were made and lost over those five days–in the roller-coaster market.
Now, before anyone exhales and believes that they made great investment moves, its important to consider that, over the last month, those same indices lost: 6.24%; 5.68% and 5.545, respectively, as of today’s close. As noted many times in this blog, the markets never move straight Up, or straight Down. Just look back at your investment statements, and you will find that all three of the indices have grown–albeit only in the five-to-six percent range–over the past year.
Keep in mind that, during the last six years, since the end of The Great Recession, the American economy has grown, and is perhaps the only major one to have consistently done so. Our Gross Domestic Product, the measure of all economic activity, grew by 3.7% in the second quarter of this year.
Our central bank, the Federal Reserve, may very well delay its plans to begin raising short-term interest rates incrementally–for the near future. That’s probably due to the current uncertainty in the global financial markets, and an inflation rate that is still below the Fed’s target rate of two percent. Stanley Fischer, the Fed’s Vice Chairman, has already signaled that the Bank is still undecided with regard to when it will start raising the “Fed Funds” rate.
NOTE: If you are relatively new at investing, you might want to read the recent blog post, which emphasized viewing the markets in proper context. The link is as follows: https://thetruthoncommonsense.com/2015/08/21/with-the-market-appearing-ready-to-post-a-fifth-straight-down-day-in-stocks-is-it-time-to-panic/