30 December 2010

Stock Indices Are Stuck

When collecting data on some major stock indices for the page Data and Graphs, I noted an even somewhat surprising similarity in all of these indices: when considering the last ups and downs, indices appear not to be able to climb above their earlier levels.

Japanese stock index Nikkei is of course the most extreme example that is obviously trending downwards. Dow Jones Industrial Average, S&P 500, German DAX Index and FTSE 100 Index are somewhere in between with their more-less stable or only slightly increasing trend over the last ten years. The picture looks the best in Hong Kong’s and in China’s Stock Exchanges, but one should keep in mind that there is a real estate bubble due to burst in this part of the world.

The strategy called “Buy, Hold and Pray” is dead unless the rules of “money game” will be changed once again. Fortunes are made by those who understand what’s going on and act accordingly. The others just burn their money, or more precisely, give it to those who can make money on both rising and declining markets. P.S. Watch for your pension savings.

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