Sentiment-al Journey
While the widely-followed blue-chip benchmark has since pulled back into four-digit territory, 10,000 on the Dow Jones Industrial Average didn’t generate much excitement. To be sure, the anchors on CNBC and the floor traders at the New York Stock Exchange donned Dow 10,000 caps for the cameras and the event definitely headlined the mainstream news, but the financial media was surprisingly quick to pan the accomplishment. Looking at a couple of columns in the press penned in the aftermath of the crossing on October 14, the Wall Street Journal wrote, “Dow 10,000: A Caution Sign for Investors,” while CNNMoney admonished, “Don’t Trust Dow 10,000.”
John Buckingham
Signs of the Times
Despite the economic ‘Green Shoots’ we’ve been seeing and the sizable rebound that the equity markets have enjoyed since the March 9 lows, we still can’t get through a business publication without seeing a reference to the Great Depression. Certainly, we are not making light of the troubles faced by many Americans, but the official unemployment rate remains in the single digits and most economists are projecting stability and perhaps the return of economic growth later this year.
The Upshot of Downside Capture
Last year was tough on practically all types of equities, and value stocks were unfortunately no real exception. This would seem to buck conventional wisdom that value stocks hold up better in downturns given the greater perceived “margin of safety” inherent in their less richly valued shares. Fact is, in most down markets value stocks do indeed hold up much better than growth stocks. However, in years when market declines are particularly severe, we see that value has been unable to provide its traditional safe haven.