Denise asks if it is a good idea to stop contributing to her 401k. The answer is no. The stock market may still go down but it is close to bottom. I know I could eat those words if the Dow goes to 4000, but I honestly believe Dow 4000 or 5000 won't happen.
Why? The Dow is made up of 30 company stocks. Many of those companies are still making a healthy profit. My beloved Coke is one of those 30 and made $6 Billion last year. There's no reason to believe Coke will see a large drop off in sales this year.
McDonalds, Microsoft, Catepillar, Wal-mart, Kraft, Johnson and Johnson and even GE... are all companies in the Dow... all still making good profits.
The Dow losers - GM, Bank of America, Citi, JP Morgan - have already fallen to close to zero. Any further fall won't affect the Dow much.
Okay, dear, not wishing to disagree with you, but once in an email last year, I asked you to predict how low the Dow would go. I think we were in the 9000 or 8500 range at that point. You suggested that was the bottom. I predicted 3800.
ReplyDeleteFast forward a few months....
Oh, and please explain to me why we just "bought" more of AIG.