Word: nasdaq
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Dates: during 2000-2009
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JAMES RIADY Raised $1M for Clinton in '92; now must pay $8.6M fine. Still a better investment than NASDAQ...
...momentum. High volatility on the upside is fun; it's nice to see that a stock you bought on Tuesday is worth 30% more on Thursday. But on the downside, it can turn a minor downtick into a major bloodbath. And that's one reason why for the NASDAQ the year 2000 was the worst in its 29-year history...
That's because an unprecedented 49% of American households today own stocks, either directly or through mutual funds and 401(k) plans, compared with just 4% in 1952. When the market rises, Americans feel wealthy. In 1999, when the Dow gained 25% and the NASDAQ soared 85%, household assets swelled by $5.5 trillion. This "wealth effect" translates into increased spending. The rule of thumb is that for every additional dollar in their portfolios, Americans spend another 3[cents] to 5[cents]. That discretionary income is critical: consumer spending constitutes almost two-thirds of the nation's economic activity...
...some cases, the fixes will take time. The NASDAQ just turned in the worst year of its 29-year existence, falling 39%. The Dow and the S&P 500 were also losers last year. The more than $2.5 trillion of vanished stock-market wealth since March won't be easy to get back. The NASDAQ, for example, would have to rise more than 15% a year for five years to return to its high. Meanwhile, consumer debt (excluding mortgages) has doubled over the past decade and averages nearly $15,000 per household. It will take years for borrowers...
...many economists believe, then the stock market could begin to recover right away as it looks ahead to the next expansion. That's how bull markets are born. Indeed, many on Wall Street predict double-digit returns from the Dow and S&P 500 in 2001. The tech-laden NASDAQ they see as more problematic, but still going higher...