The Dow Closes Down 382 Points, Down The Most In 3 Months…

Posted on February 10, 2009. Filed under: -- Economic Week In Review, . More Resources For YOU! |


By Molly Greaves

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At 11:00 am today, the Treasury Secretary Timothy Geithner, was scheduled to announce the Obama Administration’s new bank bailout plan.  Earlier, U.S. stock futures were trading lower as investors prepared for details on the new financial rescue plan. When Mr. Geithner began his speech, the Dow was down about 80 points.  As he unveiled his plan, taxpayers and investors listened closely, and many followed the Dow’s movement to see Wall Street’s reaction in real-time.  Not liking what Geithner had to say, stocks fell sharply after the plan was outlined, and the market was down over 280 points by the time he was finished, even though the market had yet to reach the bottom.

 That’s because also today, Federal Reserve chairman Ben Bernanke took the helm and appeared in front of the House Financial Services Committee. He was scheduled to talk about the moves the Fed has taken to deal with both the credit crunch and with the recession while also addressing whether the Fed should continue to have as much powers over the economy. By the time Mr. Bernanke was done speaking and answering questions from lawmakers, the Dow dropped another 100 points!!

 Meanwhile, Wall Street was also having a hard time swallowing the $838 billion stimulus package that was passed by the Senate today. “The markets weren’t impressed,” said Fox Business News Stocks Editor, Elizabeth McDonald. And understandably so. $838 billion is some serious money, wouldn’t you agree?

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Did you know that if you had spent $1 million PER DAY from the time Jesus was born, up until now, you still would be less than ¾ of the way to a trillion dollars?!  I’m not kidding! Let’s do the math…

 $1million x 365 days per year = $365 million per year

 $365 million x 2,000 = $730 billion

 (The number 2,000 is used assuming Jesus was born 2,000 years ago. I used this number to make math easy, and to help you really grasp your mind around what a trillion really is)

 $730 billion is 73% of $1 trillion, which is less than ¾ of a trillion. Yikes!

 Guess what else? With the stimulus amount that was passed through the Senate today — all $838 billion of it — being equal to almost 84% of $1 trillion, that is the same thing as spending a $1 million per day for 2295 years. That’s 295 days in addition to our example above!!

It’s no wonder with all this spending and low confidence that the market plummeted. With all of that said, the market closed today at 7888.88, down 4.62 percent or 381.88 points.  This is its lowest point since Nov. 20, the date considered by many experts to have been the low of the bear market. Hopefully tomorrow the market we’ll be back over 8000 again.

 

 

 

 

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2 Responses to “The Dow Closes Down 382 Points, Down The Most In 3 Months…”

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“That’s 295 days in addition to our example above!!”

Is that supposed to be days or years?

Blog looks great! I would love to catch up with you and discuss refinancing my home, taking my 401k and converting it a a roth IRA, and looking at some possible investment property in East Austin. Talk to you soon!

your $1 million per day since jesus example is cute, but it doesn’t take into account time value of money. nonetheless, i also participated in this sell off of equities by shorting REITs and straddling financials.

those “experts” ended up being wrong and the DJIA continued to plummet down to about 6500. i closed all of my long positions last friday because i noticed that volume was very low relative to the valuation metrics of DJIA, which is an indication that equities were being over bought. currently i am holding on to some fixed income securities (short duration investment grade corporate bonds and TIPs)

of course confidence is low…as long as the fed is manipulating monetary policy and squeezing trillions from the treasury to save institutions that are fundamentally insolvent is very frustrating for investors.

this summer tons of ARMs, commercial real estate, and Alt-a loans are going to roll over and we could experience market conditions like we had in march

i will also be looking to establish a play in gold (miners and bullion). all this printing is increasing the money supply and thus could lead to some serious inflation in the intermediate to long term. i will be planning to hedge the loss in value of my US dollars with gold.


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