- 13 Mar 2003 11:28
#2365
The DJIA is the Dow Jones Industrial Average, sometimes referred to as the DJI, or the Dow Jones Index. The Dow is the main US stockmarket, although there is one called the Russell 2K, which is supposedly doing well (ie rising).
One thing about the DJIA is that it has falledn for the past two years. It rose sometimes during those two years, but always ended the year lower than when it started the year. It's just plain economics. The Dow is over valued. This is because everybody with a dotcomafter their company name was a hero in the 1990s. If you sold a product with a computer chip in it, your share price went through the roof. Utter madness of course, as most of these companies were badly run, not making a profit, and selling to the computer market.
The funny thing about the computer market is that every good loses value rapidly. Every new technology is replaced after about 6 months, and is obsolete after about 4 years. The computer market shows consistent deflation, in that prices fall, right across the board, all the time. There is also no resellers market, as people don't usually buy second hand computers, when the new ones are only a bit more costly, and probably far better technologically.
The dotcom boom was madness, just like in the 1600s, I think, when the tulip became the most valuable item in Holland. At its peak, tulipmania saw tulips, just plain old flowers, selling for about the equivilent of a million dollars in today's terms. Everybody wanted one. Then they went out of fashion, and the economy sank without trace.
America is synonymous with technology, so America was always going to suffer the most when the dotcom boom finally ended. The boom was associated with a bull market, where stock rise in vlaue. Now the bull is in his cage, and the bear rules Wall St. Bear markets are ones where stocks generally fall in value.
What we want is a stag market, where stocks are falling now, but will rebound very rapidly. That's not the case so far as the DJIA has been falling for two years now, and as yet, shows no signs of stopping. Maybe a good war (ie a quick, cheap and emphatic victory where the oil fields aren't damaged) would be good for the markets.
Some people say that this is why Iraq is being attacked, ie to cover up the poor economy, the bear market, the failure to capture Osama Bin Laden (even teh Taliban are back in power... how many people in America knew that?), but all those points belong on the war forum.
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