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The Dow opened Friday at six-year closing low and down 47% from its all-time high. Following the path of international markets, the index declined early Friday, trading as low as 7328 before rebounding a bit; in recent trading, the Dow was down 1% at 7395.
With the November closing and intraday lows now having been breached, the next major resistance level for the Dow is its Oct. 2002 low of 7286; falling below that would put the index at an 11-year low.
Faced with those grim realities, long-term "buy and hold" investors are now understandably asking: Is it too late to sell?
The answer, of course, depends a lot on your time horizon and risk tolerance. The stock market is now at "fair value" based on the S&P 500's long-term cyclically adjusted P/E ratios, but history suggests major averages will far further before this bear market ends.
How much further remains to be seen, but signs of "capitulation" do not preclude further losses; from 1929-1932 the Dow lost 90% of its value and Japan's Nikkei today is more than 80% below its January 1990 peak
With the November closing and intraday lows now having been breached, the next major resistance level for the Dow is its Oct. 2002 low of 7286; falling below that would put the index at an 11-year low.
Faced with those grim realities, long-term "buy and hold" investors are now understandably asking: Is it too late to sell?
The answer, of course, depends a lot on your time horizon and risk tolerance. The stock market is now at "fair value" based on the S&P 500's long-term cyclically adjusted P/E ratios, but history suggests major averages will far further before this bear market ends.
How much further remains to be seen, but signs of "capitulation" do not preclude further losses; from 1929-1932 the Dow lost 90% of its value and Japan's Nikkei today is more than 80% below its January 1990 peak
Source Aaron Task
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