Compare The Market

Cathy Said:

How do non-U.S. markets compare with the U.S. market?

We Answered:

Most countries have a stock market, but they are very different from the US markets. Most of them a much less liquid - that is, they don't trade as many shares, so sometimes it is hard to buy or sell at the stated market price.

European markets such as the FTSE (UK), DAX (Germany), the CAC (France) have performed better than the US has recently.

This is especially true for US investors, because of the benefit of currency exchange. US investors generally have to sell US dollars and buy Euros in order to buy European stock markets. Because the Euro has continued to strengthen against the US dollar, money that US investors have placed in European stock markets have benefited twice - once by the relative outperformance of foreign markets, and once by the outperformance of the Euro versus the US dollar.

there are easy ways to invest in foreign stock markets. Go to www.Vanguard.com for low-fee NO LOAD mutual funds that allow you to invest in foreign stock markets.

Good luck!

Julie Said:

How does the current US market compare with the 1920s market crash?

We Answered:

Not yet.

But the market crash was not the Great Depression. What caused the Great Depression was that so much money was loaned out to buy overpriced stocks that it brought down the banks. Once the banking system started to fail it wrecked the ability to borrow and do business so many businesses failed as well.

The troubles today do have a similar ring to it. What has scared people and promoted the comparison is that this time the overpriced asset was homes and not stocks. But the banks were still way over leveraged and the falling home prices have threatened the banks and credit now as well.

One thing that is different is that there is more value in the homes even after falling than there was in the stocks. And the leverage was generally lower.

In the 1920's you could buy stocks with 10% down and borrow the rest.

Now they were loaning against homes at 0% down. This created the risk and the bubble. But the majority of homes and mortgages are still good. It is still only a percentage going bad. Then again, the more prices fall, the more homes that go under water where they owe more than they are worth.

Gwendolyn Said:

How does today's recess in the stock market compare to the crash of 1929?

We Answered:

dow
1928 +48.2%
1929 -17.2%
1930 -33.8%
1931 -52.7%
1932 -23.1%
1933 +66.7%

nasdaq
year to date (going off yahoo charts)
2007 about + 2%
2008 about -14%

Paul Said:

Why do national income accountants compare the market value of the total outputs in various years rather than?

We Answered:

because its the easiest tool to measure national income..

Patsy Said:

Why do national income accountants compare the market value of the total outputs in various years?

We Answered:

chicken

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