The Dow Jones Closed At 6,700. How Do You Feel?

by Silicon Valley Blogger on 2009-03-0320

With the Dow Jones having closed at around 6,700, are you still hanging on to your stocks? How do you feel about the interminable, drawn out dive that the stock market is taking these days?

I know I say this quite often, but I’m really having a very packed schedule lately. But I’m not so busy that I don’t notice what’s going on in Wall Street.

The Dow Jones Is At 6,700.

What continues to grab my attention, in the midst of my activities? The stock market indexes. They’re reached their 12 year lows. Watching them is like witnessing water torture. I want to look away but I can’t. With the Dow at 6,700 and the S & P at 696, I don’t know what to think anymore, except that I’ve stopped crossing my fingers and hoping for recovery in this century (okay that’s an exaggeration). What I mean is that I’ve stopped caring so much anymore, about the stock market turning up, and have instead begun to accept that it will be a long, hard road to any kind of recovery.

Still, I’m continuing with my investment strategies and proceeding with the usual dollar cost averaging plan. I continue to rebalance our portfolio as well, trying to rework our highly skewed asset allocation.

I’m also investigating alternative investments and keeping an eye out for potential investment opportunities in a decimated economic landscape. And as I mentioned in earlier articles, I’m increasing my efforts to develop and build our cash flow, to make up for the things I cannot control. See, at least I can control my cash flow: it’s something I can actively do. I’m tired of feeling helpless about our investments and since I cannot predict nor control the markets, I prefer to focus on things that have a better shot at yielding positive results, at least for the time being.

So How Do You Feel?

I’ve come across the question several times recently, which I thought I’d ask here. Is there any level that the stock market can reach upon which you’ll find yourself capitulating? Is there any point at which the markets can settle, when you’ll finally decide to pack it in and give up stocks and equities?

At this time, I strongly think it’s too late to be thinking this way. And you know what? I sure hope I’m right!

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 20 comments… read them below or add one }

Michael Harr March 3, 2009 at 9:16 pm

Feeling great! Best buying opportunity of my lifetime (33 yrs. young) and getting ready to open up a Zecco account to play the leveraged ETF market. My buy signal was anything under 7k on the Dow and here we are. I am planning to buy 3x ETFs over the next six months or so and will plan to hold somewhere around three to five years, dialing back the risk afterwards. The market doesn’t get much better than it is today. Even the bleakest outlook is for recovery by mid-2010 and with the market usually ahead six to nine months, I should be feeling even better next year with some nice profits in hand. I’m a big asset allocation/buy and hold proponent, but with this unique period, I’ll be peeling off about 20% of the long portfolio to accumulate 3x ETFs.

Miss M March 3, 2009 at 10:48 pm

I’m sitting tight, I don’t feel I have any alternative at this point. The time to have bailed was long ago. I’ve accepted it will probably go lower from here, I read a prediction of dow 6500 some time back. I don’t know what point will cause me to bail, I dont think I will know until we get there. Let’s hope it doesn’t happen.

Jeff@StretchyDollar March 3, 2009 at 11:53 pm

I’m hanging on, trying to get going but not really sure what to do at this point. We’re building up the beginnings of our mini ‘investment fund’ but are finding the current situation really perplexing. Sure makes for lots of research though…

her every cent counts March 4, 2009 at 5:44 am

I’m in a state of denial. At 25, and having just started investing 2 years ago, it’s really tough to face my $10,000 in losses thus far. Knowing that my losses are nothing compared to what people who are older are facing makes me feel… a little better. And, knowing that I’m going through this with the rest of the country gives me hope. At some point things have to turn around, right?

To be honest, though, I question that daily. I don’t really let myself get too attached to money, and see the stock market as a smart game to play if I buy low and wait. Afterall, if the stock market ever starts to move up, only the money I invest when it’s at its cheapest will have much of an upside. All that money I invested 2 years ago… it may return by the time I retire, possibly, but it will probably take that long.

Like you, I’m looking into alternative investments. I don’t make that much money, but at the same time this is the first year of my life where I’ve had a stable (ie silicon valley startup with at least a year runway) job that it makes sense to invest some, if not a lot, of my money.

I keep looking at stocks on sharebuilder and thinking “whoa, that’s a great deal.” It’s my sale mentality. I always go to the sale rack at shops and spend way too much. That’s kind of what I’m doing now. Proctor and Gamble on sale? Sweet. McDonalds. Make it a big mac. Seriously.

Maybe I shouldn’t be allowed to invest in individual stocks… but mostly I’m still focused on ETFs and my Vanguard accounts. The one thing making me feel a bit better is that my Sharebuilder account is down only 34% while my Vanguard account is down 45%. Well, it sucks to be down that much regardless, but I guess I’m not doing that bad picking stocks and ETFs quite yet.

More than anything, I’m excited for when things do turn around. Investing during a recession this bad is a once-in-a-lifetime opportunity. Or at least, that’s how I’m trying to look at it, as I watch my money disappear with the rest of the world’s.

Neal Frankle March 4, 2009 at 6:50 am

Anxious. I am a financial adviser. Outside the fact that my income has been creamed, my clients are about 10 years older than I am (I’m 51) and they are terrified. That’s tough for me because I’ve known them so long they are more like friends.

My personal experience is that its difficult and not much fun to work in this field right now. However, I signed up for this and I’m not about to turn tail.

So I’m trying not to let my feelings interfere with my day to day but it is difficult at times.

Susan March 4, 2009 at 7:33 am

I’m not feeling great about it – but it is a good opportunity to buy. Our investments are well diversified, and I’m continuing to contribute to my 401k. I will indeed be a long recovery, but I have about 15 years before I need to become VERY concerned. We’ve lived quite frugally for about 4 years, but we’re still paying down some financial damage we did to ourselves before wising up. All we can do is hang in there, cut our expenses, and wait for the job market, stock market, housing market, etc. to pick up.

I do think I need a news break soon though – it’s very depressing and I think I need to celebrate the good things – we have our health, we paid the bills this month, there is food on the table, we have family and friends who care about us – it’s time to focus on the good for a bit. 🙂

the weakonomist March 4, 2009 at 9:14 am

I honestly don’t care about the Dow. It’s 30 companies and the tracking method is flawed to all getout.

Now because the S&P dipped below 700 for a hot minute I paused for a second and almost decided to care. Every lower point is just another discount on my buying.

Dana March 4, 2009 at 9:15 am

I think most of us that haven’t gotten out of the market yet have decided it’s a bit late to bite the bullet. It’s probably even more painful to think about how long it’ll take to recoup the capital, if we grow and contract at similar rates to how the last 12 years went.

Some say the market has yet more to go, as we’re currently at 12X earnings, and the market tends to hit the bottom at 5-8X. Nobody knows for sure at this point, given how uncertain the European market looks.

GeekMBA360 March 4, 2009 at 11:11 am

Still watching from the sideline. I pulled out all of my investment from stock market last year. I use the Great Depression as my yardstick — during the Great Depression, the stock market was down by 90%. What percentage has the Dow felt during the current economic crisis? 50%+. I would hate to see it, but I’m afraid that we could still have a long way to go until we reach the bottom.


Slinky March 4, 2009 at 11:46 am

I graduated college last May and started my 401k in august. The first dollars I’m putting into the market are buying in at these crazy low prices and have the next 40+ years to grow. I’m still down about 18% including my Roth IRA, but as long as it doesn’t look like total Armageddon, I’m going to keep putting money in!

Brian March 4, 2009 at 4:16 pm

I’m an indexer with 40 years till retirement. It may sound bad to most people, but I’m hoping the indexes stay at these depressed levels for a few years. This is a great buying oppurtunity for those with very long term time horizons.

Millionaire Mommy Next Door March 4, 2009 at 4:37 pm

The momentum/trend investing strategy I use signaled my decision to get out of the market in the Spring of 2008 when the DOW was around 11,000 if I recall. My money has been parked in FDIC-insured accounts since then, thank goodness! I lost some before then, of course, but much less than those who have stayed put. And I’m sure I’ve been sleeping better than most since I don’t feel it necessary to fret over the daily glut of bad news on Wall St.

I feel terrible for those who have lost so much, especially people in retirement or close to it.

I still have faith in the long-term growth prospects of businesses and their stock shares. But I am afraid we’ll continue to see more volatility and downward pressure for quite some time, unfortunately. We seem to be sitting in the middle of “the perfect storm”. But as with all storms, they DO eventually end. We WILL see brighter days!

Ken March 4, 2009 at 8:45 pm

I’m not investing any additional money right now. Neither am I pulling any out. I’m not confident in things at all right now.

kitty March 4, 2009 at 9:42 pm

I am on a fence. I am 49 and although I had about 40% of my money in safe investments last year, so I lost about 20%, it’s a considerable amount of money given that I’ve always lived within my means and have always saved some portion of my salary.

For the moment, I am continuing to invest in 401K and put about half of the money into stock funds. I moved some money between funds, but I am still buying there.

In taxable accounts, I bought a couple of individual stocks in recent weeks for some small amounts of money, but mostly I am increasing my cash/CD holdings. My employer had layoffs recently (after supposedly good earnings). The worst of which was apparent lack of any clear pattern on how the people were chosen. I think the decisions were made 3 levels above the immediate manager, so nobody really knows what the criteria were. This makes everyone who is left scared as it doesn’t look like anybody is safe. Not to mention that hardly anybody is hiring. I might start putting more money into stocks after I get 10 years worth of expenses in cash/CDs.

Funny about Money March 5, 2009 at 9:09 pm

Neal’s term “terrified” is close: doomed is how I feel. At retirement age, I’m sunk. There’s no chance the market will turn around enough to recover my losses in the near future — probably not in my lifetime. I’ve resigned myself to the fact that what remains of my retirement savings will not be enough, combined with Social Security, to support me…not ever, no matter how long I keep working. And pretty clearly if I can hang onto my job (far from a foregone conclusion), I will have to keep working until I drop in the traces.

A substantial part of my stock holdings were moved, during one of the brief upticks, into gold, bonds, and cash. My financial guys kept some money in the market, figuring (as many still insist) that this is the time to be investing. I’m not so sure.

I feel angry: no, make that filled with hatred for the misguided, doctrinaire fools and the greedy SOBs who got us into this.

And I feel sick of thinking about it: there’s not a thing I can do about it, other than to get used to a sub-middle-class standard of living.

JEM March 6, 2009 at 8:17 am

I am feeling really uneasy. I am preparing myself for the worst and hoping for a turn around. I have not pulled anything out, though I wish I did earlier. I am 28, with at least 30 years until I retire, so I am hoping time is on my side. I am not continuing to invest in my 401k or IRA right now. Instead I have bought a very nice very under valued house as an investment. I got it from the bank for 58k. When it was first biult in the early 90’s in was sold for 124k. I can not see how this can go wrong.

Doug March 6, 2009 at 9:07 am

You’re all crazy. Even Warren Buffett is warning of a pathetic 2009 and forecasting gloom for the foreseeable future. If you’re not seriously questioning your stake in the market right now, you’re not living in the real world.

J. Money March 6, 2009 at 1:54 pm

i feel like it’s gonna do what it wants to do. i’ll continue maxing out my 401k every year and picking it all up cheap as balls until it’s time to retire….actually, it better not still be check 40 years from now! haha….as long as it *starts* going up in the next 2-3 years all will be fine.

Sharescity March 10, 2009 at 3:41 pm

I feel good but I’ve been out of the stock market for around 18 months. I still feel this market has further to fall, despite today’s 300 point rally. Some people are talking of DOW 4000 S&P 500 – that seems like a distinct possibility to me. The thing to watch out for is if the DOW goes up for more than 2 days in a row or if there are more advancing stocks than declining stocks but the market still declines. That could be an indication that the bottom is close.

calmwinds March 27, 2009 at 6:48 pm

I feel ok but only because of my age(37). I predict the DOW will see bottom at about 5200 before we see a very, very slow recovery(10 years plus). When we see a drop of 300-400 points one day then a rise of 300-400 points over the next few days/weeks it means the bottom has not arrived. It means people still have money to play the market’s lows and hence are not broke. When the bottom hits everyone will be broke and unable to invest and make the market rise by 300-400 etc.. over a very short time. We’re not broke yet but working towards it very fast. Hang on folks!

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