Posts Tagged ‘dow jones industrials’

Let's get back on our horse and ride! NO MORE WHINING!

Saturday, March 7th, 2009

I am getting pretty tired of all the panicy talking heads and all the whining about how bad it is. Yes, we are in a deep recession. But let’s put this recession into perspective:

Great Depression v. Today:

1929 to 1933 our GDP declined 45%.  2007 to 2008 our GDP grew 4% and worst case it will be wobbly or flat for the next few years.

1929 to 1933 unemployment exploded from 3% to 25%.  2007 to 2008 our unemployment jumped from 4% to 8% so far and could conceivably grow above 10% but not much more because we have already injectd $1.3 trillion into the economy and several sectors including medical, internet applications, and green tech are still in growth – just not as high as it was.

1929 to 1932 the Dow Jones Industrials collpased by 89%.  2007 to 2009 the DJI fell by 55% and it’s pretty clear that we have not reached bottom. But to collapse as badly as the Great Depression, the DJI would have to reach 1584 by 2010. Not likely givent that the P/E ratios of many solid earnings companies like MSFT, DIS, IBM, etc are running at 7 while the S&P500 is at 18. Shrewd investors are already evaluating bargains.

And of course, as bad as the Great Depression was for the US in the 1930′s it is just a blip when compared to the catastrophic economic collapses that hit Germany during the Weimar Republic, Brazil during the 1980′s, most Eastern European countries after the collapse of the Soviet Union.

Yes, many people are out of work and that makes for suffering and anguish for millions. But let’s be honest with ourselves. Most of the people in the US have been living high on the hog for several decades, living a lifestyle well beyond their means. How big of a house do you need? How many cars? How many cellphones in 5 years? How big of a flat screen TV? How many people really need a boat…and how big does it have to be? 

Dave Matthews said it best. What we want is what we’ve not got. What we need is all around us.

This setback in our economy will not last more than another year or two. Enough whining! There is a lot of work to do, a lot of opportunity for those willing to try, and for those willing to fail there is enormous wealtht yet to be created.

Let’s be tenacious and get back on our horse and ride.