Existing-home sales jumped in September to their highest [seasonally-adjusted] level in 13 months, and based on this data, 5.1 million homes will move into new ownership this year- a 1.4% increase from a year ago. Analysts had estimated this number to hit 5 million from the 4.91 million that moved in August, so could this be a sign that the sludge is finally clearing? Experts have been saying for a while that we need houses to move for the economy to move, so maybe. But based on this week’s numbers on Wall Street, even if every house sells, something else may need to kick this country out of its funk. Obama? Oh God, please let it be Obama.
The last time I wrote about the Dow’s average- eight trading days ago- it was at $9,311. Within those past 8 days, the average has dropped 10% to close yesterday at $8,378. The Dow is made up of 30 companies, and a quick Google search is enough to find out which ones.
Let’s put this into perspective for a second by dividing both 9311 and 8378 by 1000 to get some numbers we were all used to seeing (if we were lucky) on our high school report cards, or if we went to an A, A-, B+, etc school, the grades we calculated ourselves to buffer report card shock.
Now let’s consider we’ve already taken 29 exams and we’re on the 30th one (30th company in the Dow), and let’s switch the numbers so that we’re now at a respectable 83% and we’re trying to figure out what score we’d have to get on that 30th exam to bump our average up to the much more respectable 93%. Here we go with some high school algebra…
[(83)(29) + x] ÷ 30 = 93
A little cross multiplying, subtracting from both sides.….
We’d have to get a 383% on that 30th exam to bump our grade from 83 to 93.
$8,378 is the lowest the Dow’s seen since April 2003. Everything is down. For a minute there a week or so ago it seemed that maybe the worst was over, but the numbers this past week and a half show that the worst is not over. So when will we see the worst? The worst part about the answer to that question is that no one has any sort of idea about an answer to that question, and even when they think they’ve crunched the numbers hard enough and dug deep enough into the annals of history to see how long it took for the bottom to be hit the last time, we have another Black Monday or Tuesday or Wednesday, or entire week. Most people alive have never seen such a thing, and I’d say all people on Wall Street have never seen such a thing except for in that one history elective they may have had to take in business school where they read about something called “The Great Depression”.
It’s amazing, really. True I’ve lost about half of what I’ve invested since July, but I’ve got time on my side and an overall apathy about money. Yeah I want to turn a little into a lot, but it’s more about the game of it, or the experiment to see if it can actually be done. If I did turn $10k into $100K, what would I do with it? I have absolutely no idea. Maybe I’d buy a house somewhere, but I think people who buy houses usually have a rough idea about where they’d like that house to be located.
My one regret is that I have too much going on outside Google Finance and Bloomberg.com to really keep up on what is happening day to day. I keep the corner of my right eye on my stocks, but as far as what OPEC’s doing, where the $700 or $850 or whatever billion is going, which companies are failing, who’s buying who (whom? Whatever.), and all that stuff I was able to read about during summer vacation, I’m in the dusk. Speaking of OPEC, I’m reading today they’re going to cut production in an attempt to drive prices up. They’re messed up. But their ploy may not even work anyway since the entire global economy is in the can and we don’t have anything to put their dumb oil in, even if the stuff was being given away. Crude oil fell to a 13-month low on October 23, and closed yesterday at $64.15 a barrel. Go ahead OPEC, try your best you greedy bastards.
As for my plan, I’m waiting for one of two things to happen before I consider averaging down on the stocks I own that are still afloat by then, and maybe even picking up some other ones like Apple (APPL) and Wachovia (WB): the Dow to hit $7,000 or $10,000. I figure that even if $7,000 isn’t an actual bottom, it has got to be pretty close (um, right?) and $10,000 will be a real psychological barrier to break. In all honestly, I’d like to see $7,000 before $10,000, just so I can get in on the super cheap.
