Stock Market Finally Finds a Bottom in 2009
Editor's Note: This is one part of a series of stories looking at the top stock market stories since 2000.
The plummeting stock market finally found its bottom in March of 2009, but not before shedding another 2,400 points (as measured by the Dow) from the horrible 2008 market.
As with all market bottoms, it wasn't for certain until some weeks had passed.
Investors faced staggering losses not seen since the crash preceding the Great Depression.
One of the significant differences between the modern crash and its historical predecessor is the number of U.S. households owning directly or indirectly stocks.
Thanks to retirement plans and pensions, millions of households have an important stake in the stock market.
The stock market often leads the economy and that was certainly true in 2009.
The market began a recovery months before the economy showed even the feeblest signs of life.
The housing crisis was far from over and, thanks to falling home values, many families saw their net worth fall into negative numbers.
While the economy struggled it threw off jobs by the hundreds of thousands in the first part of 2009.
Thanks to an improving economy, job loss slowed toward the end of the year, however millions were out of work with an unemployment rate in excess of 10 percent.
Huge government intervention in the economy continued. Chrysler and General Motors filed bankruptcy.
Almost $800 billion in federal stimulus money begins to filter into the economy.
The stock market enjoyed a rebound in the latter half of 2009, but remained far behind its highs for the decade (see table below).
Many shocked investors had fled the stock market during its darkest days converting to cash or bonds, missing the opportunity to regain part of their loss.
The year 2009 ended with the stock market uncertain, but hopeful that the economy was finally on the road to recovery.
Much of the stimulus money had not made it way into the economy by the end of 2009. As that money became available, investors hoped for a stronger economy and a return to widespread profitability.
Will investors carry caution forward from the debacle of 2009 and avoid excessive risk?
The odds are that many individual investors will be more risk adverse in 2010 and forward.
However, that will only be possible if they are able to accurately judge the true risk of an investment.
While Wall Street will mightily resist, more regulatory oversight will be necessary to assure investors that they can accurately judge the risk.
Previous stories:
Stock Market, Economy Suffer Major Losses in 2008
Housing Market and Credit Crisis Push U.S. to Collapse in 2007
Stock Market Moves Higher and Housing Boom Nears Explosion in 2006
Stock Indexes Dull in 2004, But Gasoline Tops $2 per Gallon
Stock Market in 2003 Set Stage for Later Crisis
Deep Bear Market Begins to Turn in 2002
Attacks, Scandal Rock Stock Markets in 2001
Dot.com Collapse Heads Stories from 2000
Major Index Information for 2009
The plummeting stock market finally found its bottom in March of 2009, but not before shedding another 2,400 points (as measured by the Dow) from the horrible 2008 market.
As with all market bottoms, it wasn't for certain until some weeks had passed.
Investors faced staggering losses not seen since the crash preceding the Great Depression.
One of the significant differences between the modern crash and its historical predecessor is the number of U.S. households owning directly or indirectly stocks.
Thanks to retirement plans and pensions, millions of households have an important stake in the stock market.
The stock market often leads the economy and that was certainly true in 2009.
The market began a recovery months before the economy showed even the feeblest signs of life.
The housing crisis was far from over and, thanks to falling home values, many families saw their net worth fall into negative numbers.
While the economy struggled it threw off jobs by the hundreds of thousands in the first part of 2009.
Thanks to an improving economy, job loss slowed toward the end of the year, however millions were out of work with an unemployment rate in excess of 10 percent.
Huge government intervention in the economy continued. Chrysler and General Motors filed bankruptcy.
Almost $800 billion in federal stimulus money begins to filter into the economy.
The stock market enjoyed a rebound in the latter half of 2009, but remained far behind its highs for the decade (see table below).
Many shocked investors had fled the stock market during its darkest days converting to cash or bonds, missing the opportunity to regain part of their loss.
The year 2009 ended with the stock market uncertain, but hopeful that the economy was finally on the road to recovery.
Much of the stimulus money had not made it way into the economy by the end of 2009. As that money became available, investors hoped for a stronger economy and a return to widespread profitability.
What Did We Learn?
Will investors carry caution forward from the debacle of 2009 and avoid excessive risk?
The odds are that many individual investors will be more risk adverse in 2010 and forward.
However, that will only be possible if they are able to accurately judge the true risk of an investment.
While Wall Street will mightily resist, more regulatory oversight will be necessary to assure investors that they can accurately judge the risk.
Previous stories:
Stock Market, Economy Suffer Major Losses in 2008
Housing Market and Credit Crisis Push U.S. to Collapse in 2007
Stock Market Moves Higher and Housing Boom Nears Explosion in 2006
Stock Indexes Dull in 2004, But Gasoline Tops $2 per Gallon
Stock Market in 2003 Set Stage for Later Crisis
Deep Bear Market Begins to Turn in 2002
Attacks, Scandal Rock Stock Markets in 2001
Dot.com Collapse Heads Stories from 2000
Major Index Information for 2009
| 2009* | |||||
| Index | High | Low | Swing | Year Start | Year End |
| DOW | 10,548 | 6,547 | -4,001 | 9,034 | 10,428 |
| NASDAQ | 2,291 | 1,268 | -1,023 | 1,632 | 2,269 |
| S&P 500 | 1,127 | 676 | -451 | 931 | 1,115 |
| *Index information adjusted for dividends and splits Swing is the difference between the high and low closes for the year | |||||
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