The Stock Market: I Shall Return
In case you wonder what is going on in the stock market lately, you would find plenty of reasons why it has been in a free fall: the deflated housing market, banks’ outlandish losses, the waning consumer spending, and the “R” word that started to hit every investor’s mind-whether it is already happening or not.
One reason that I can think of, especially at this point of time when S&P500 is close to 1300– the level where the market was at about one and half years ago, can be summarized by that famous sentence from General Douglas MacArthur: “I shall return.” That is what he said when he retreated from the Philippines. Indeed, he returned and went on all the way to Tokyo bay until the Japanese Instrument of Surrender was signed on the battleship USS Missouri.
While MacArthur’s words indicated his willingness and resolve to do everything needed to return to the Philippines, the same character can be said about the stock market. The market goes up and down, and it tends to revisit the old places where it came from. What goes up, in the case of stock market, usually comes down. Pull out a stock market chart of Dow Jones Industrial Average or S&P500 index of the past ten years, you will see what I mean. The stock market, measured by S&P500 index, went from 1500 in those internet bubble days to the low of about 900 in 2002. And it took the market 5 years to return to its high of 1500 in last fall.
The market has its highs and lows. And no matter where it is, it will, sooner or later, honor these words–I shall return –to the low or to the high.
