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FRED
10-05-06, 06:23 PM
Dow Jones Record Highs Point to Economic Recovery, but Investors Still Remain Cautious (http://biz.yahoo.com/ap/061004/dow_s_new_record.html?.v=11)
October 5, 2006 (AP)

There is as much relief as there is celebration on Wall Street now that the Dow Jones industrial average has set new record highs for the first time in nearly seven years -- these milestones are more a sign of recovery than achievement.

The index of 30 blue chip stocks reached its second straight closing high Wednesday, soaring 123.27 to 11,850.61, after rising as high as 11,851.25 during the session. On Tuesday, the Dow wiped out its old closing high of 11,722.98 and its previous trading high of 11,750.28, both of which had stood since Jan. 14, 2000.

Yet despite Wednesday's surge, today's Wall Street investors are a more cautious lot than they were six years and nine months ago, and that is why it has taken the Dow, which reached closing highs on a daily basis during the high-tech boom, so long to come back.

They have reason to be conservative -- they have seen a series of events starting with the dot-com bust and recession and including the aftermath of the Sept. 11, 2001, terror attacks wipe out trading portfolios and send companies into bankruptcy and oblivion. They've also had their faith shaken by scandals at companies including Enron Corp. and WorldCom Inc.

AntiSpin: iTulip reader Benjamin sent us this link with the comment that this is "quite possibly the dumbest financial news story I've ever read."

The writer interprets the current Dow rally as an indication from investors that "economic recovery has begun." Recovery from what? We thought the "recovery," such as it is–even though it has hardly created any jobs and real incomes have declined–started in 2001.

That's pretty dumb. At the same time, the writer also senses "conservatism" among investors and believes it is justified because they have seen, "...a series of events starting with the dot-com bust and recession and including the aftermath of the Sept. 11, 2001, terror attacks wipe out trading portfolios and send companies into bankruptcy and oblivion."

Who is "they"? Institutional investors? Individuals? Foreign? Domestic?

All we know is that individual investors are sitting this one out, broader markets such as the Russell 1000 and S&P are creeping along, and that if The Boyz can work the institutional investors to keep the Dow positive until end of year, some of them get their end-of-year bonuses.

The writer goes on to make other dumb comments, and the whole story is–we have to admit–a high bar, dumb analysis-wise. But is this really the "dumbest" story about this rally?

We doubt it! We bet our readers can find even more idiotic explanations for the current rally.

We thank Benjamin for setting the bar with this article and thus begin our Stupidest Excuse for a Stock Market Rally Contest (http://www.itulip.com/forums/showthread.php?p=3336#post3336).

The contest is open for submissions from October 5, 2006 to the end of the month or the end of the rally, whichever comes first. Then we'll put the submissions to a vote by forum members.

The winner receives a signed copy of americasbubbleeconomy–or, if the winner already has the book, a silver dollar–and a title promotion on the iTulip forums to Omnipotent Poobah.

Go to the Stupidest Excuse for a Stock Market Rally Contest (http://www.itulip.com/forums/showthread.php?p=3336#post3336) and enter your submission today!

Rajiv
10-08-06, 05:19 PM
Blogger Cryptogon has been tracking the holdings of professional versus amateur (day-trader) investors in investments in the funds that buy proportionately the entire Dow Jones Industrial Index 30. The pros are betting heavily (http://cryptogon.com/2006_10_01_blogarchive.html#115999695350561842) on a plunge over the next two weeks (short positions) while the amateurs are still buying long positions hoping for more record highs.