2007 was not a fun year for many investors. The stock market wasn't just volatile, it was downright manic, swooning between euphoric highs and cataclysmic depressions in the blink of an eye.Stocks took frequent and at times unjustified beatings as investors fretted about everything from the subprime mortgage crisis to political instability in the Middle East. Nonetheless, the major indices ended the year on a positive note, which indicates that at least some people on Wall Street, including Warren Buffett, see reason for optimism.
For example, the S&P 500 Index ended this year up 3.5%, which should give millions of index fund investors reason to celebrate in their own quiet, conservative way. The big winners were energy companies, which according to Bloomberg News, gained 34% as a group. National-Oilwell Varco Inc. (NYSE: NOV), the biggest oilfield services company, surged 143% through December 28, the most of any company in the index, Bloomberg says, adding that the biggest loser was Countrywide Financial Corp. (NYSE: CFC), not surprisingly.
At times things looked much worse. But tech investors ruled the day this year, sending the Nasdaq Composite Index up 7.94%, buoyed by gains in such stalwarts as Apple Inc. (NASDAQ: AAPL) (up 136%), Google Inc. (NASDAQ: GOOG) (up 52%) and Microsoft Corp. (NASDAQ: MSFT) (up 20%). Even eBay (NASDAQ: EBAY), Wall Street's least favorite tech stock, finished the year with an 11% gain. The Dow Jones industrial average gained 6.4%.
Looking ahead, 2008 isn't going to be much better, at least at first. The housing market shows no signs of rebounding from the wost downturn in 16 years, which as Bloomberg notes, "likely means economic growth next quarter will be less than 2 percent and the Federal Reserve will respond by cutting interest rates again, economists predict."
The Wall Street Journal notes that analysts expect the market to remain "choppy" until the subprime write-downs begin to slow down. That's a nice way of reminding investors to keep their flotation devices inflated and to take plenty of seasickness medicine.
Looking ahead, 2008 isn't going to be much better, at least at first. The housing market shows no signs of rebounding from the wost downturn in 16 years, which as Bloomberg notes, "likely means economic growth next quarter will be less than 2 percent and the Federal Reserve will respond by cutting interest rates again, economists predict."
The Wall Street Journal notes that analysts expect the market to remain "choppy" until the subprime write-downs begin to slow down. That's a nice way of reminding investors to keep their flotation devices inflated and to take plenty of seasickness medicine.
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Tiffany's serves up solid quarterly earnings
Reader Comments (Page 1 of 1)
1-04-2008 @ 9:00PM
Robert Bennett said...
This article is much more positive than Ms Read's AP article today about a very modest drop in the Stock Market, actually less than 1% each of the three market indicators. Ms. Read appears to have purposely gone out o her way to promote bad news about the US economy.
Personally, I don't hold much brief for people who bought more house than they could afford on an ARM plan. I hold even less brief for those lending institutions who claimed in their advertisements they were experts on poor credit ratings and bankrupticies.
It was a pleasure to read this one.
1-02-2008 @ 6:55PM
cynthia burdge said...
i,m no expert,but my investments are up a good deal more than the indexes. maybe that due in part to ignoring all those erratic gyrations of the market and follow the basic rule of buy low,sell high,not panic and sell every time you hear negative news.
1-01-2008 @ 12:48PM
snickerdo9 said...
if your employer has a 401k plan by all means
especially if you're nearing retirement such as myself , contribute as much as you can ( save your money ) to the plan . i've maxed out my contributions over the last 6 1/2 years . don't gamble your hard earned pay in a market of uncertainty and volitility as we're seeing these days. being greedy will cost you dearly. iv'e seen it happen it some of my co-workers over the last several months . many participants aren't saving enough or saving at all . in other words they had more money invested in the market than what they were saving . after starting to save to my plan 8 1/2 years ago my portfolio has grown to 6 figures + mainly becauce of my saving my money diligently.