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Business > A Look Back at the 2007 Year In Investing
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Article rating : 0.00, 0 votes. Author : R. O. Shipman
The only constant during the year was a big move by the stock market either up or down. There were 69 trading days this year with at least a 100-point move in the Dow Jones Industrial Average, 48 of them which occurred since July 1st. Great year for volatility traders, that’s for sure.
2007 began with the S&P Index at approximately 1416. The S&P 500 rose dramatically and then fell below a positive return for the year three separate times. In early March when investors first became aware of the sub-prime issue. In July and August, the sub-prime issue hit the stock market with full force.
Finally in the last quarter in mid- November another downturn occurred when banks continued to write-down assets and reports made it clear that the
sub-prime mortgage issue was continuing to be serious, widespread and might push the economy into depression. Many investment management firms and professional traders had seen this coming, whereas many amateurs were caught with a downside surprise.
The stock market rebounded quickly after each downturn because investors seemed to take an ostrich-like approach to the future always choosing to believe that the worst of it was over. In March, investors chose to ignore the warning signs when the mortgage company New Century went out of business and Countrywide struggled. In September the stock market recovered simply because the Federal Reserve cut rates one half of one percent even though the extent of the damage to banks and brokerage companies with exposure to the sub-prime market was unknown.
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