Stock market yo-yo

by | Feb 26, 2008 | Asset Management, Stock Market Comments

Another Weird Day on Wall Street

Today, Tuesday, February 26, 2008 we received some negative economic news. There were reports of surging inflation and declining consumer confidence, and the early indications were the stock market would be down nearly 100 points.

Not helping matters either was a story circulated by comScore late Monday regarding Google’s pay per click advertising revenues possibly falling recently and remaining flat compared to the same period last year. This has not been confirmed by the company. But since this is the primary source of Google’s revenues, this news sent Google shares skidding over 30 points.

But IBM saved the day – at least, temporarily – by hiking its guidance for the year and announcing it would buy back $15 billion worth of its stock. Again, temporarily, this news has turned the market around and the Dow is up 75 points at midday.

Look, there are two views you can take in this market.

The first view is the day-to-day view, which will make you feel like you’re going up and down like a yo-yo. Last Friday, as an example, the market was down 150 points during the day — but closed up nearly 100 points at the close. Monday (yesterday), the market was up 189 points — and it appeared that the market would continue to give it all back this morning, based on the early morning economic news.

The second view, or the longer-term view is worth looking at. Eight years ago, in late February 2000, the S&P 500 index was trading at approximately 1350. Eight years later, the S&P 500 is trading at approximately 1370. This is a gain of 1.4% — not including any dividends — for the past eight years. A money market investment would net you more.

We are not advocating over-trading your accounts. But it’s important to be aware of what’s happening in the bigger picture, and to make sure that you have money placed in areas that are moving up. There are tools available at your disposal which can tell you which sectors are moving up and which sectors are moving down.

If you’d like more information on these tools, feel free to visit our site.