Monday, January 17, 2011

Stocks Move into Healthy Territory

In August 2008, in the midst of much angst about the economy, I realized that three numbers defined not a spectacular stock market, not even an excellent one, but certainly a “healthy” one. Those numbers are a Dow at 12,000, an S&P 500 of 1,300, and a NASDAQ of 2,500. The three numbers total 15,800, so I measured how far the market was from “healthy” by calculating the distance between the current market and 15,800.

Well once my index was in place, we never did reach a “healthy” market. Far from it. By March 2009, the market had fallen almost 50% of the way from “healthy” to zero, nada, nothing. Terrible times. Full recovery seemed a long way off.

Could be that 22 months is a long time. But a healthy market made from a Dow at 11,787, an S&P 500 at 1,293, and a NASDAQ at 2,755 hitting numbers not seen since 2007—all adding up to a healthy 15,835 (see chart)—is where we are today. And it’s great news. Wall Street is back. Now for that follow-on job and housing recovery our country so badly needs.

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