Dow up almost 19 percent for 2009
While the economy is still staggering toward better days in 2010, the stock market started the party last year.
Despite a down trading day Thursday and a very turbulent year, stocks closed strongly up for 2009.The Dow Jones Industrial Average finished at 10,428.05, after falling 120.46 for the day. The almost 19 percent annual gain was the best performance since 2003.
“It was one hell of a ride and I'm glad to say it's over,” said Rick Dupuis, president of Royal Capital Management in Boca Raton, which manages $80 million.
South Florida stocks moved up in pace with the market. A Bloomberg index of South Florida companies practically doubled from its low point in March. The leading South Florida stock was Q.E.P., a Boca Raton firm that manufactures tools and flooring products. Its shares soared 238 percent. At the bottom of the local list were BankAtlantic, down 50 percent, Singing Machine, off almost 61 percent and Catalina Lighting, down 87 percent.
The Standard & Poor's 500 index slipped 11.32 points Thursday to close at 1,115.10 and the Nasdaq composite index fell 22.13 to 2,269.15.
To many investors, who are trying to protect their portfolios from the roller coaster ride in stocks, even an up year won’t be cause for celebration, because their portfolios haven’t grown since 1999.
2009 will be remembered as the end of the Lost Decade, because major market indexes are virtually flat over the last ten years.
And that hides all the tumult that has happened to investors since 1999: The dot com stock boom and bust of 2000-2003, the housing boom and bust, 9/11, the bailout of Wall Street and the worst recession since the 1930s.
When stocks finally did start moving up in 2009, the surge was sudden in markets here and abroad. Some of the strongest gains, ironically, came in U.S. financial and banking stocks, even as the number of domestic bank failures rose during the year.
Early in the year, it didn’t look like any stocks would be winners. The Dow Jones Industrial Average declined 25 percent between the start of the year and March 8. In that carnage, investors worldwide lost $24 trillion, according to Colbert Investment Management of Miami.
Since then, the Dow has risen more than 61 percent.
That makes 2009 the first year of a new bull market – a period in which stocks are rising strongly. Standard & Poor’s says stocks have always continued to rise in the second year of a bull market, throughout history, although gains in the second year are weaker than in the first.
Eight out of ten professional money managers expect a rising market next year, said a survey by Russell Investments.
The pessimists look at the economy as still struggling and the prospects for business profits uncertain. Unemployment nationwide is expected to stay above 10 percent until the end of 2010. The pessimists point to other threats -- rising government spending and the threat that inflation will come back to life, perhaps after government support of financial institutions begins to ease off in a few months.
Individual investors seem to be on the pessimistic team. hey pulled billions out of U.S. stock mutual funds and put more than $348 billion into the relative safety of bond mutual funds.
But those bond funds would be hurt if interest rates rise from current levels, as expected.
Dupuis, the Boca money manager, says investors should keep an eye on rates, corporate profits and watch out for “wild cards” such as the price of oil as they try to discern the market’s direction in the new year. He’s optimistic that it’ll be up – at this time last year, he said there was a 50-50-chance of stocks rising in 2009 – but making market predictions, he said, are about as easy as “nailing Jello to a wall.”POSTED IN: Wall Street (26)