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Dow Unchanged Since 9/11 But Don't Bet Against America, Ritholtz Says

Posted Sep 15, 2009 10:00am EDT by Aaron Task in Investing
Related: ^DJI, ^GSPC, SPY, DIA, BGU, QQQQ, FXI
The anniversary of Lehman's bankruptcy has come and gone, and so too has the commemoration of the 9/11 terror attacks.

Wall Street suffered terribly when the Twin Towers fell and many traders nervously noted the Dow was at 9605 on both Sept. 11, 2001 (it was the prior day's close - markets never opened on 9/11/01) and on Friday Sept. 11, 2009.

Setting aside the eerie coincidence, the bigger issue for investors is the Dow is essentially unchanged for the past eight years.

Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation, says the market action the past eight years - really since the peak in 2000 - is classic secular bear market activity, where you get dramatic swings in both directions.

History suggests we're about two-thirds of the way through the current bear market, Ritholtz says, suggesting investors would be wise to employ tight stops and be much more focused on protecting capital vs. during secular bull market phases.

But as discussed in the accompanying clip, Ritholtz disagrees with the popular view that this prolonged period of market malaise means "buy and hold" is dead -- or that America's economy is going to be stagnant forever.

Full disclosure: I collaborated on Ritholtz's book and was paid for my efforts.

 

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