The Innocent Comment
Sometimes, a single comment can have deep meaning. Or at the very least, be worthy of a full-blown CNBC alert.
General Motors Vice Chairman Bob Lutz managed to capture our attention with a single comment: that the “mortgage industry meltdown” is reducing affordability for auto buyers and negatively impacting April sales.
As our Phil LeBeau explained when we threw him on the air to talk about this, such comments aren’t necessarily surprising -- and April sales are still likely to be better than they were in March.
It’s possible that the subprime problem may, indeed, spread to other areas of the economy. Or it may become just a popular scapegoat, just like the weather often is, for sales numbers -- in any industry -- that don’t meet expectations. That doesn’t mean it isn’t the case in the auto industry -- just that this is a trend we’ve often seen in the past, and should watch for in the future.
I’m fascinated with numbers. I have no idea why, but I know many on Wall Street share my fascination, especially where the major market averages are concerned.
As the drive for Dow 13,000 continues on Wall Street, our Wall Street Journal liaisons were kind enough to pass on a list of dates upon which the Dow had first achieved various thousand-point multiples. What struck me about this list was just how bullish the bull market of the late ‘90s really was.
It took the Dow a little over 14 years to get from 1,000 to 2,000, which it achieved in January of 1987. From there, it took another four years and change to get to 3000, a level finally breached in April 1991, and nearly another four years to get to 4000 in February 1995.
From there, however, it was off to the races. From that point, the Dow breached each thousand-point level with seeming ease, capped by its first close above 11,000 on May 3, 1999.
We all know what happened after that. 12,000 didn’t come until last October -- about 7-and-a-half years later.
CNBC’s former chief economist, Bill Wolman, always said the same thing when confronted with stats like this: that’s why, if you’re investing in stocks, you should put a little bit of money in all the time.
I won’t get into the vagaries, advantages, or disadvantages of dollar-cost averaging, but it’s all a stark reminder of how easy it all seems when the market is rising -- and how painful it can be when it’s not.