(Flashback) Dow Jones Breaks 6000- Oct 14, 1996

[SoCalDem]

Just a reminder...it took 88 years for the Dow to hit 1000, and now the pressure is immense to keep it above 11k..

In my mind's eye I can still see the guy on Ed Sullivan... the one with all the spinning plates....





http://www.pbs.org/newshour/bb/business/october96/dow_10-14.html

CASH COW DOW

OCTOBER 14, 1996
TRANSCRIPT

As the stock market reaches yet new heights, Jim Lehrer and economist Jim Angel theorize on what might happen next.

JIM LEHRER: The stock market's new record is first tonight. The Dow Jones Industrial Average finished above 6000 points for the first time ever. We get some perspective on that from Jim Angel, a Georgetown University finance professor who studies the stock market. Welcome.

snip.....

PROF. ANGEL: Yeah. The Dow Jones Industrial Average started in 1896. As a matter of fact, this year is the 100th anniversary of the Dow Jones Industrial Average. And it took 88 years for it to cross the 1000 mark, and then--let's see--a fuzzy memory--I believe it was 14 years--

snip....

JIM LEHRER: Yeah, but anyhow, has it been--the last--how--give us a feel for after it went to 1000 how it got to where it is today in terms of just--in terms of how it grew.

PROF. ANGEL: Well, the--when I was growing up in the 60's, it flirted with 1000 for the first time, and that was considered to be quite a miracle--quite an amazing level. But then because stock prices are quite volatile, it bounced around in the 70's, and it took the better part of another decade before it hit the 2000 level. And then during the 1980's, you may recall, right around the crash of ‘87, it had peaked at 2700, and then was at the trough down in the 700 range. Then it, it came up a little bit in the early 90's, and at the beginning of the Iraqi war, it hit another low point and then since then, it's been on a pretty steady climb since the early 90's.

snip....

PROF. ANGEL: I think it's one of those things. As the stock market has gone up over time, that 1,000 points isn't what it used to be, that when the stock market was 1000, a thousand points was doubling the stock prices.

snip.....

JIM LEHRER: Yeah. All right, now, looking ahead, what do you experts think, how long will it be before we hit 7000?

PROF. ANGEL: Well, nobody really knows the answer to that, that--I mean, it could happen in a few months, or it may take decades. Nobody really knows.

JIM LEHRER: What is the expectation? In politics, there's conventional wisdom. What's the conventional wisdom on this, that we may be--you and I could sit here a year from now and be talking about 7000?

PROF. ANGEL: We could be. The expectation is that on average, stock prices will go up probably depending on who you talk to anywhere between 6 and 10 percent a year in real terms, that--so we expect stock prices to go up over time as companies continue to invest, as they continue to produce, as they continue to reinvest their dividends. Now, the--but how fast that's going to happen is anybody's guess because stock prices are very volatile, and they go not only up they also go down as well, and the reason why stock returns have been so much higher than other asset classes like Treasury bills or government bonds has mainly been because the stock market is a risky place.

snip.....

[gaspee]

1. In 1996

I was trading options in the Microsoft trading crowd on the Pacific Exchange in San Francisco. The market is corrupt beyond repair. End of story. The things people don't know...

The big cases that have been settled in the past few weeks are only the tip of the iceberg.

[SoCalDem]

2. and the upsurge in the market directly corresponds

to the time in our economy when the middle class started really taking it in the shorts...and started losing pensions like there was no tomorrow..

To think that it wasjust 1000 during the time when our economy was at its most prosperous, and the middle class was at its zenith...well that says a lot...