Too Much, Too Soon

Wall Street seemed to have plenty of disappointing economic data and earnings warnings this week. So what was missing?

Stock buyers…

The Dow dropped 66 Friday to 10,623. The Nasdaq fell slipped 15 to 2028, and the S&P 500 shed just over 5 to close out the week at 1214.

The bear market rally seems to have run its course. “Analysts now say [the rally],” USAToday tells, “in which the Dow recaptured the 11,000 mark it lost back in September, was too much, too soon.” Momentum buyers only hope? More aggressive rate cuts from the countries most celebrated civil servant – Fed Chair Alan Greenspan.

“Investors were sold a bill of goods about how to ‘get rich’ during the Great ‘Bull’ Market…” says the Blue Team’s Dan Denning. “The evidence suggests most Americans got just the opposite.” More below…

ADD’L PRICES FOR THE WEEK: Pound slipping…Gold sees

Gold: $272

Crude Oil: $28.68

Natural Gas: $3.98

CRB Index: 209

Dollar Index: 118

The Sad, Sad Euro: $.86

British Pound: $1.39

Japanese Yen: $.82

THE BLUE TEAM HOTWIRE: Investment Intelligence

During the greatest bull market of all time, most Americans missed the boat entirely. Research compiled by the DR Blue Team’s Dan Denning reveals the “very rich” still own about 90% of the total value of stock shares, bonds, trusts, and business equity, and about three-quarters of non-home real estate.

What else?

* Most Americans are Getting Poorer: According the U.S. Census Bureau, for all Americans, median net worth fell by 17% in real terms between 1984 and 1993. 40% of Americans have less than $1,100 in total wealth. The average wealth of the poorest 40% of Americans fell by 76% between 1983 and 1998, and by 1998, had fallen to only $1,100.

* The Rich are Getting Richer: Between 1983 and 1998, the top 1% of Americans received 53% of the total growth in net worth, 56% of the total growth in financial wealth, and 47% of the total increase in income. The figures for the top 20% are 91%, 89%, and 88%, respectively.

* Middle Class Families are Twice as Likely to Have High Debt: The debt to equity ratio was also much higher among the middle 60% of households in 1998, at .51, than among the top 1% (.03) or the next 19% (.13).

Addison Wiggin
Paris, France
June 16-17, 2001

The Daily Reckoning