Is The Wall Street Rally Real?

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September 20th, 2009

It’s the best rally since 1933

Wall Street, amazing as it may sound, is enjoying its best rally in decades. Now the debate on whether the market has gone too far, too fast or is ready for a second wind is heating up.

The debate

Some investors and market players say the economy is gathering steam and will keep the market on track, while others argue that this is a “sucker rally” and is not supported by economic fundamentals. However, in the week to last Friday, the Dow Jones Industrial Average of blue chips advanced 2.24 percent to 9,820.20, its highest level in 11 months. The technology-heavy Nasdaq composite and Standard & Poor’s 500 both finished about 2.5 percent higher. So what’s actually going on?

Best 6-month rally since 1933!

The gains since the early lows of March, 50 percent for the Dow, represent the best six-month rally for the blue-chip index since 1933. The other indexes have also soared over the past six months – 58 percent for the S&P and 68 percent for the Nasdaq – although all the indexes remain well below their all-time highs. Bob Dickey at RBC Wealth Management said it is likely the market can return to levels before the collapse of Lehman Brothers and other events last year that led to a panic. That could push the Dow to around 11,000.

Outside the market

Things are still grim in the street outside the market. Unemployment is very high in the western countries and businesses and banks are still collapsing. The price of oil yo-yo’s up and down and many of the economic indicators are still negative, showing that the recession is not over. Some sectors are battling to stay in business and some vital sectors, which took a beating in the recession, are having trouble getting back on track. The overall picture is not clear.

Un-Happy birthday

Next Tuesday, Sept. 15, is exactly one year since Lehman Brothers filed for bankruptcy protection. The company’s collapse was the biggest bankruptcy in history, and it sparked one of the largest-ever financial panics – large enough to almost drag the entire economy down with it. It also led to a flurry of domino type collapses, suicides and other mayhem. Hot on its heels came Bernie Madoff, slamming more nails into the coffin lid. That was the start of the current recession and despite the so-called stock market recovery, the entire world is still in the throes of the aftermath. My portfolio is up, meaning that I am winning the battle but on a wider front, I am still losing the war. The

Obama treatment

President Obama used the Lehman Brothers collapse anniversary and the near-death experience of Wall Street together with his $600 billion taxpayer financed bailout to call on the political will for change. Yet the prospects are not clear. All that is certain is that the big banks know they’ll be bailed out by the government if they fail.

This entry was posted on Sunday, September 20th, 2009 at 7:21 pm and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Is The Wall Street Rally Real?”

Gilbert Benbrook says:

August 5, 2010 at 4:01 am

Hi, What ever happens to the lottery winners after they run out of money? I am sure that after so many years of living high on the hog, they have horror stories. Any links to any stories would be useful. What about the people who take annuities. I am sure when the 18th or 19th year comes around, they start worrying because they only have a couple more years of money. Are there any lawsuits against the lottery commision for really stupid reasons like them not being able to take care of themselves after the money is gone?

Is The Wall Street Rally Real?

One Response to “Is The Wall Street Rally Real?”

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