January 2009: The Worst Month in History
Feb 1, 2009
Posted by Jody Eisenman | Filed under Uncategorized
After a promising start, January finished much the way of the last five months, with losses. The S and P 500 dropped 8.6% for the worst January decline in 81 years. The Dow dropped 8.8%, which is the worst January in history according to Blomberg. This data goes back 113 years. There are very few places to hide in this market. Other than the bankruptcies and forced takeovers (Lehman, AIG, Fannie Mae, Merrill Lynch, etc.) virtually every sector has suffered severe declines. Here is a sample list of a cross section of the market. Each of these stocks are part of the S and P 500.
Stock 52 week high Current Price
Alcoa 44.77 7.79
AK Steel 73.07 8.07
Dell Comp 28.04 9.50
Dow Chem 43.03 11.59
EBAY 33.47 12.02
Expedia 26.04 8.93
Ford 8.79 1.87
Forest Labs 42.76 25.04
Halliburton 55.38 17.25
Sears 114.00 40.92
This list does not include any financial stocks.
The economic situation is quite grim. Nominal GDP fell at a rate of 4.1% during the fourth quarter of 2008. This was the steepest drop in 50 years. Our economy has been driven by consumer spending. Consumers worried about their future are cutting back everywhere. Combined with the horrible shape that the banks are in, this has led to a severe recession. I honestly have no idea how bad it could get. However, the fact that our economy is so intertwined with the rest of the world has led to a situation where much of the civilized world is contracting simultaneously.
For a fascinating interview with Nissim Taleb and Benoit Mandelbrot concerning this, please click here: http://www.brasschecktv.com/page/542.html
Be prepared to be shocked!
