The stock market is crashing — slowly, and in plain view of the people who count on it most. The 53% plunge in the stock market wealth has vanished, and with it the confidence that springs from financial security.since October 2007 has wrecked the college- and retirement-savings plans of millions of investors. It has permanently lowered the long-term investment projections of private endowments and pension funds. It has sent corporate compensation experts scrambling to figure out how to reward top employees. All told, more than $10 trillion of
By David Henry
While 17 months may feel like an eternity, it could turn out merely to be a prequel. The questions on the minds of investors, , and corporate executives are threefold: How much longer will the bear market last? How low will the averages go? And when might investors get their money back?
Ashas said: “Beware of geeks bearing formulas.” It’s especially difficult to predict the direction of the markets these days because the most popular gauges, from price-earnings ratios to measures of investor “capitulation,” have stopped working. The peculiar nature of this bear market limits the kit of useful tools to just a handful of bond market and business confidence indicators.
Those signals, along with interviews with financial historians, market strategists, and economists, point mostly to painful scenarios. Stocks don’t seem likely to fall much more from here — butcould continue for months or even years. Worse, by the time the market revisits its highs, so many years are likely to have passed that many older people will have gotten out of stocks, missing out on the rebound. The flip side is that new money put into the stock market now will likely do comparatively well over the long term. That’s welcome news for twentysomethings and , but perhaps not for soon-to-be retirees.