stocks than they've bought the past four years, nearly unprecedented in a bull market since World War II. Burned by two stock-market crashes in less than a decade, Americans have sold more U.S. The past four years, none of that has happened.Īdding to the chastened mood is lingering fear among many investors that stock gains can disappear in a flash. Typically, bull markets are accompanied by rising trading volume, a surge in young companies going public and Internet chatter over hot stocks. He says his portfolio has doubled in value in four years.Īs stock rebounds go, this has been an unusually quiet and uncelebrated one. Sachs adds, "People are still fearful and that's a good sign. "You have to be greedy when others are fearful," he says, quoting a famous line from billionaire Warren Buffett, who also bought in the panic. In fact, as others scrambled to exit stocks in late 2008, he plunged in more - scooping up drug maker Ely Lilly and Co., health-care products giant Johnson & Johnson and food company General Mills. One man who stayed calm and didn't sell was Jay Sachs, 70, a retired computer consultant. There had been 11 previous bear markets since World War II and none had reached 50 percent. That was far less than the nearly 90 percent drop in the Great Depression but scary nonetheless. He calls the stock gains since "pretty remarkable."įrom its peak in October 2007 to its bottom in March 2009, the Dow fell 54 percent. "People thought we were going to relive the 1930s," says Robert Buckland, chief global stock strategist at Citigroup.
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Banks were collapsing, lending was frozen, world trade was plunging, and stocks were in free fall. In the depths of the recession four years ago, few investors would have predicted such a fast recovery. It's a lot more fun to be in a rising market." In early 2009, when stocks were plummeting, "it looked like Armageddon was nigh. "It feels great," says Marty Leclerc, chief investment officer at Barrack Yard Advisors, an investment firm. service companies grew last month at their fastest pace in a year. Retail sales in the 17 European countries that use the euro rose faster than expected, China's government said it would support ambitious growth targets, and a report showed U.S. Good economic news Tuesday helped lift stocks. Most middle-class wealth is tied up in home values, which are still a third below their peak. household wealth nearly back to its peak before the recession, though many in the middle class are still deep in the hole. The stock gains have helped retirement and brokerage accounts held by many Americans recover. companies continue to report big profits. It comes as car sales are at a five-year high, home prices are rising, and U.S. Still, the Dow high is another sign that the nation is slowly healing after the worst recession since the 1930s. Bush still had another year as president, Apple had just sold its first iPhone, and Lehman Brothers was still in business.īut unemployment was also 4.7 percent versus 7.9 percent today, a reminder that stock gains have proved no elixir for the economy. The last time the Dow hit a record, George W. The Standard and Poor's 500, a broader index, closed at 1,539.79, 25.36 points from its record. Adjusted for that, the Dow would have to reach 15,502 to match its old record. The Dow record does not include the impact of inflation. Since bottoming at 6,547.05 on March 9, 2009, the Dow has risen 7,706.72 points or 118 percent.
Those who have reinvested dividends or added to their holdings have done even better. The new record suggests that investors who did not panic and sell their stocks in the 2008-2009 financial crisis have fully recovered. "Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement." "It signals that things are getting back to normal," says Nicolas Colas, chief market strategist at BNY ConvergEx, a brokerage. The blue-chip index rose 125.95 points Tuesday and closed at 14,253.77, topping the previous record of 14,164.53 on Oct. Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios and made investors despair of ever getting their money back, the Dow Jones industrial average has regained all the losses suffered during the Great Recession and reached a new high.
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