Wednesday, August 25, 2010

It's Lonely at the Top

In December of 1989 the Japanese Nikkei (stock market) hit an all-time high of 40,000; a level many believed was just a stopping-off point for much greater things to come. Unfortunately, for those who bought with that expectation, they were sadly disappointed. The same could be said for the NASDAQ, which closed at an all-time high of 5,048 in March of 2000. In October of 2007, the Dow Jones Industrial Average closed at a record of 14,164. So, have we seen the Dow hit its all time peak?

A case can be made that the Nikkei, the NASDAQ, the Dow, housing, the Beanie Baby, and the tulip bulb, will never reach the heights they once attained. In fact, we may be entering an era where 5-digit Dow Averages are a thing of the past. Could we even conceive of a 3-digit Dow?

Anything is possible when deflation rules the roost.

Till next time,

Bill


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