The DJIA hits new highs

I try my best to be fair. Sure, I can be silly with things like Michelle Antoinette, but when it comes to the core of this blog, government policies and the way those policies affect us, it’s always to our advantage to observe all sides.

Just in case you haven’t noticed, the Dow Jones Industrial Average has been on a rampage the last few weeks. Today’s opening number was 14,447.29. That’s more than double the low of 7,062.93 on February 27, 2009. It took less than a year and a half for the index to drop from a previous high of around 13,900. The restoration was four years in the making.

In the past, I’ve kept you updated on charts since meeting President Obama.

September 19, 2008

February 18, 2009

October 15, 2009

April 24, 2012

djia 3 13


That Obama is president for the next four years is a given. Now the market appears to be reacting to the guaranteed liquidity at very low interest rates promised by the Fed until 2015. Many economists agree that by definition, there will be inflation. This market wants to be ahead of any inflation.

For disclosure, we stayed all in. It proved to be a very good choice. Now here’s a little tell-all that perhaps will help some of you who don’t hang out in the stock market understand why the rich get richer when something like this market crash and recovery happen. No one let that bottom go without selling for losses and then immediately buying again. The losses were put to itemized tax returns that year, and the losses reduced the amount of taxes owed on other gains. It’s called tax-loss harvesting, and yes, it’s perfectly legal.

But the wild ride we’ve had over the last few years widens the gap between the haves and the have nots. The middle class ran from the market – see how the volume went down? – and had some serious real losses as many of them had only come in at the end of the last rally. The haves rode the roller coaster and made it work for them. No gains are recognized until they sell, and if they sell at this current top, taxable gains are offset by the carry-forward of the losses harvested at the dip. In the meantime they can borrow against this returned wealth at very low interest rates.

Yes, it’s a little complicated, but here’s my point:

For all the rhetoric President Obama puts forward to be a champion of the middle class, under his watch poor and middle class incomes have fallen sharply, while the rich are richer.


  1. jimspice says:

    But he’s a socialist!

  2. J. Strupp says:

    “For all the rhetoric President Obama puts forward to be a champion of the middle class, under his watch poor and middle class incomes have fallen sharply, while the rich are richer.”

    No, you told me back in 2008 that Obama was going to ruin rich people and the very thought of him as President caused a collapse in equities. Then you told me that rich people were going to take their ball and go home (whaa whaa) if Obama taxed them more. Then you told me about all of this uncertainty from Obamascare, etc. that was holding back markets. Now you’re saying that rich people have been doing just great GREAT! under Obama so ha, ha, ha?

    I think it’s time to walk away from this one. Why not just say that you were completely wrong about the past five years and spare us the lesson in tax-loss harvesting?

    Besides, the stock market has always been a place where the rich get richer. This isn’t news and Obama wasn’t going to do anything change this fact. Direct participation in the stock market by the middle class is a fairly recent event. The difference between now and 40 or so years ago is that the middle class used to see their share of productivity gains in the form of higher wages and/or better benefits. Not so anymore. Our elected officials have rigged the system to allow capital to take almost everything. And it’s only going to get worse. Screwing labor is a national past time for conservatives, while liberals recognize the problem but are too cowardly and weak to do anything about it. So this is where we are. The rich get richer. The middle and lower class gets the shaft.

    Now let’s get back to slicing and dicing Social Security and Medicare so we can afford to buy a few thousand F-35’s.

  3. Yes, that post was for you. And if I said all that, then it would be easy to provide quotes, right?

    I do think the very thought of Obama is what caused that market dip. And now that there’s an end date on the guy, the market can react to other factors.

    There is still a lot of money on the sidelines. While the DOW drifted upwards, who knows when the rest of it will come back in.

    Point remains, Mr. Strupp, you didn’t get much out of this President’s game either, did you? Tell me exactly how he’s made your life all you ever imagined.

    JimSpice – all a socialist does is dictate different winners and losers. That socialist leader will always end up as a winner – until he loses the whole bet.

    Whatever he is he isn’t exactly performing as his rhetoric dictates.

  4. J. Strupp says:

    “Point remains, Mr. Strupp, you didn’t get much out of this President’s game either, did you?”

    No. But my bar is set pretty low currently. The goal is simple: Keep a Republican out of the White house for as long as possible until a real liberal shows up who’s willing to reverse the damage that conservative economic policy has done to this nation since Reagan.

  5. Bullshit. You were quite the Obama fan early on. He had 2 years with absolutely no Republican interference. Man up. Confess.

  6. J. Strupp says:

    And I’m still an Obama fan. I think that, under the circumstances, he’s done a decent job. He could have done more, a lot more, in those two years that he had a free reign. But his Achilles heel since the beginning as been his willingness to negotiate with people who shouldn’t be negotiated with even when he didn’t have to (and he’s a terrible negotiator).

  7. Mr. Bean says:

    Never thought this glorious revolution would work out so well. Thank you Uncle Keynes!

  8. The market doesn’t track with which party has the presidency. It tracks with which party controls the purse strings.

  9. jimspice says:

    With (R)s forcing any meaningful resolution to to a super-majority 60 votes, I’d like to know when, exactly, it was that the 56 (D)s in the Senate faced no (R) interference.

  10. JimSpice – before Ted Kennedy died? I thought that was right at the Obamacare slide through.

    Ryan – interesting. So it’s coincidence about Obama, except that the harshest dip happened with a D/D/D arrangement, so they definitely controlled the purse strings.

    Despite all the talk, maybe the market likes gridlock? It looks like we’re in the sweet spot of a D pres with R opposition.

  11. Funny how you can set the table with facts and a segment of the population continues to follow their beliefs.

    How’s your Gramma’s nice safe savings account been performing over the past 4 years? After all Gramma should not have to risk her life savings in the stock market to see better than 1.5% return.

  12. “After all Gramma should not have to risk her life savings in the stock market to see better than 1.5% return.”

    I’ve heard people say that health care is a human right, but never that 2% returns are a human right. Why not 15%?

  13. I’m happy that George W. Bush was unsuccessful in privatizing Social Security — diverting taxable wages from FICA into private accounts where individuals could do their own investing in stocks, bonds, mutual funds, etc.. That was 2004-2005. The economic collapse of 2008 was bad, but imagine the consequences if this other one of his wacky ideas had been enacted.

  14. C. Mart – what you basically just admitted is that you are glad you weren’t trusted to manage your own money. That means you probably aren’t doing a very good job of it now. I know a couple of people who aren’t very expensive and can help. Just ask.