Wednesday, October 22, 2003

the dow

Jumping the Gun



Perhaps I was being overly optimistic. About three weeks ago, I predicted that the DJIA would approach 10,000 by the end of the year. However, the index seems to be in an October slump. I remember reading somewhere that the markets always go through a slump and then get a big bounce towards the end of the year. As of this writing, the Dow has lost 113 points. There seems to be a barrier at the 9800 mark, as the average has hovered between 9400 and 9700+ for some time now. It's getting boring. I want it to go up.

What is silly about my interest in the stock market is that I have very little invested in it. Granted, I was lucky enough to begin contributing to my 401(k) in January of 2002, right as the market hit bottom and began to climb. But it's not like I have tens of thousands of dollars in the account.

Anyway, I don't really see evidence of the richies reinvesting their dividends in the stock market, which was supposed to be the boon of the dividend tax cut. That reinvestment was in turn supposed to spur job growth. Which was, of course, complete and total bullshit. Fed officials have decided to be cautiously optimistic about the prospect of economic recovery, but none of them are fooling themselves that this current slight uptick in economic activity is anything more than a short-term stimulus from our latest government-crippling tax cut. When the extra money runs out, how much job growth will we see then? Most agree that the 2.5 million manufacturing jobs we've lost in the last 3 years are gone for good.

Though Dubya justified his tax cuts under the guise of spurring investment, most economists agree that our current lull in job creation stems from overcapacity due to the investment boom of the 90s, and that, until capacity is squeezed, new investment and new jobs are out of the picture.

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