March 13, 2001
Beware -- The Bear Is Just Getting Started!
Who would have predicted that just one-year after the Nasdaq set its record close the index would plummet 62%? We did, that's who. And as we've been also been telling you, the rest of the stock market will soon follow suit.
The S&P; 500 closed in bear market territory -- down 22.7% from its peak last year. The Dow's 436-point drop yesterday was its fifth-largest decline in history. Yesterday, the Dow closed down 12.9% from its record high in January 2000. Clearly, there's room for plenty more pain in the blue chips.
The bursting of the tech bubble has made many investors feel much less wealthy and less willing to spend more, and the decline in the economy will continue to be felt by companies in all sectors.
The outlook is not getting any rosier. Retail sales growth was much lower than expected in February, reflecting a lack of consumer confidence. Since consumers generate 2/3 of the gross domestic product, lagging consumer spending means the economy will continue to suffer. Without a recovery in the economy, company earnings will continue to fall. And much-hyped interest rate cuts won't stimulate spending enough to fuel a turnaround.
The odds are firmly stacked against a revival of the economy or the bull market. If you think the bear has punished the market, you ain't seen nothin' yet.
® 2001 Weiss Incorporated
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