Since last September the S&P 500 is down about 10%. Since September 2007 the S&P 500 is down about 30%. Most of the problems in the economy existed back then, we just didn't know about them. Now, the highs from 2007 were a dangerous level and not supported by the underlying economics. However the current lows are still depressed from where they should be based on projected earnings and overall economic considerations.
There are many people who feel that because we have recovered from what were ridiculous levels in March, the current market has gone up too high. What was priced in the March market was a collapse of the economic system six months out, or now. Well instead of collapse we have the start of a recovery. If the market looks six months ahead, it should be higher than it is now.
We still have analysts and others predicting that housing prices are going to fall dramatically further and that the economics will continue to deteriorate. As you see business making profits because they have cut to the bone, the only legitimate path into the future is up. Hiring is going to pick up, partly because of the stimulus but also because we are seeing an uptick in economic activity.
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