CHESSNOID

On October 7, we will be at the anniversary date of the stock market hitting its all time high.  These are the numbers I have for the 3 major US indexes I follow:

DJIA  52Wk High: 14,279.96

NASDAQ  52Wk High:  2,861.51

S&P 500 52Wk High: 1,576.09

Today, on October 2, 2008 almost a year later the numbers have plummeted way past bear territory (-20% or more)

DJIA  current 10,482.95

NASDAQ  current  1,976.72

S&P 500 current 1,114.28

What a difference a year makes.  We broke some technical floor numbers, and it looks like we are about to test some psychological numbers.  Will the DJIA dip below 10,000 or the S&P fall below 1,000 before the end of the year?  The NASDAQ has already broken the 2,000 floor.

I think this is just part of the business cycle and we probably would be doing better now if the 3 stooges didn’t interfere with the business cycle earlier in the year when they lowered interest rates 7 times in 7 months down to 2% and printed money in unprecedented amounts.  This actually created a recession to become worse than it had to be. Corrections and adjustments are normal, but when the 3 stooges Bush, Bernanke, and Paulson do price fixing in the market only bad things happen.  I doubt anyone could argue otherwise now that the financial dominoes have already tumbled.

We are on the verge of passing a $700  billion bailout bill using taxpayer dollars that will only increase inflation.  On top of that, I am now reading the 3 stooges want to lower the interest rates again.  We are at 2% which is what you will make if you put it in the bank. Yes, that is better than negative returns in the stock market.  Based on the last 7 rate cuts they already have executed and looking where we are now, I highly doubt this action will have any positive long term effects.  Yes, the stock market will rally for a day or a week, but then the nagging hangover comes back in the form of more reports of record foreclosures, record unemployment, and still inflation or stagflation to boot.  These are the problems they need to deal with.  Reducing the interest rate down to 1% or 0% only weakens the value of our already falling dollar.  Seriously, what are the 3 stooges smoking?