The overall intention of the Rescue Plan was not just to create liquidity in the marketplace, but more importantly to promote consumer confidence. So far, it’s not working… Both the stock market and the bond market have been hit extremely hard. Rates have gone up a full .625% since Wednesday morning – that’s huge.
On another note of market significance is an interesting coincidence:
October 9, 2002 marked the end of the of the last bear market, which lasted from March 24, 2000 to October 9, 2002. October 9, 2007 marked the beginning of the bear market that we’re currently experiencing.
The definition of a bear market is a 20% decline in the economy. The average loss in our historical bear markets is 32% and the period of decline lasts for an average of 12.3 months. In our current market, stocks have dropped by more than 32% and we’re just shy of the 12.3 month average. Hopefully the coincidence stops here and that we are out of this bear market by next October 9th!
