The Dow crossed 10,000 today, and the cheers on the floor of the exchange were much louder than you would expect. If I were them, I would not want to point out the fact that U.S. stocks have been the worst investment on the face of the earth for the past ten years. (The Dow hit 10,000 the first time in March of 1999) Money markets, bonds of all stripes, foreign stocks, gold, oil, and you-name-it have all outperformed stocks. Yet we continue to allow ourselves to obsess over this market, as well as hitch our retirement wagons to this machine. The purpose of this machine seems to be to enrich those on Wall Street and in the upper echelons of corporate America. Wow! How liberal/socialist/Michael Moore did that sound?
But think about it. For all of these years, all other markets outperformed stocks. Also consider that the U.S. GDP has expanded by roughly 30%. Yet stocks are flat. Why? More competition both here and abroad? Certainly part of it. Stocks are simply grossly undervalued? Highly unlikely looking at what EPS are being projected into the future. Think about this though. We know that those at the top of corporations have seen exponential growth in incomes over the years, while employee wages have been stagnant. We also know that the shareholders of those corporations are also not being rewarded. Where is the money going? The buck stops at the top – literally.
Today the WSJ had an article which said that bonuses on Wall Street for 2009 will set a new record! I don’t mean just better than last year; I mean better than the previous record set in 2007. This is all coming after the Street managed to pillage the economy and us, the poor villagers. They didn’t even bother rewarding their long-suffering stock holders with a few pennies in added dividends. But it gets worse. Also today, in the NY Times, there was an article regarding how wages and salaries to workers are actually being cut at a pace not seen since the Great Depression! We’ve had a record setting nine straight months of declining wages. Overall average compensation to workers is back to 2000 levels. Just put those two articles from the WSJ and the NY Times side by side and read. It should become clear what is happening.
The stock market has been the worst performer on the globe for the average investor. But for Wall Street and the corporate kingpins, the stock market has been a virtual gold mine.
The type of rally we’ve had this year would normally be attracting investors in droves. Yet, that hasn’t happened. There is a tremendous amount of money on the sidelines, which when it moves, has tended to go into bonds not stocks. Wall Street keeps talking about how that wall of money will send stocks soaring. Is it at all possible that the money is not coming back to be debased by Wall Street? Did we all really figure out what Wall Street’s true game is all about? Nah….we’ll get sucked back in again soon. Would be nice to think otherwise though.
