Stocks plunge, 2007 gains wiped out

Wall Street extended its 2008 plunge Thursday [17 Jan 2008], sending the Dow Jones industrials down 306 points and to their lowest level since last March after a regional Federal Reserve report showed a sharp and unexpected decline in manufacturing activity. The Dow lost nearly 2.5%, giving the index its worst three-day percentage decline since October 2002. The Standard & Poor's 500, the index closely watched by market professionals, fell nearly 3% Thursday. The Dow, S&P 500 and the Nasdaq composite index have now given back all of the gains they achieved in 2007.

bloomberg.com :

U.S. stocks posted the steepest weekly drop since July 2002 after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is entering a recession. Citigroup, the largest U.S. bank by assets, plunged 14% to $24.45, the lowest since February 1999, after reporting the biggest loss in its 196-year history. Home construction fell 14% in December, concluding the worst year for the industry since 1980. The Standard & Poor's 500 Index declined 5.4% this week to 1,325.19, the lowest level since September 2006. The benchmark for U.S. equities has tumbled 9.8% this year, its worst-ever start.

- Okay, so I was a little bit early when I was talking about a wipe-out on all 2007 stock gains back on 6 August 2007. Let's see what the scoreboard looks like now :

As you can see, these major stock indexes have had all their 2007 gains completely wiped out : all 3 major US indexes the Dow Jones, S&P 500 and the Nasdaq, as well as Japan's Nikkei index, Canada's TSX, and Australia's ASX.

From the list, only India's SENSEX and the China SSE indexes are still flying high, though not as high as they were. India is no longer above the 20,000 level and China hasn't quite seen the 6000 level for a while and, in fact, is flirting with the 5000 level.

As for Singapore's STI Straits Times Index, at the point of writing, which is just after the market re-opened after lunch-time on Mon 21 Jan 2008, it is now at 3017.65, having dropped 86 points. Singapore's STI is wiped out too.

2008 is really going to be interesting. Stock markets getting wiped out within the first 3 weeks of trading, a looming recession and yet growing inflation at the same time, $100 oil on the first trading day of the year, and gold hitting $900 and reportedly on its way to $1000 and beyond.

In fact, one of the few ways that you could have stayed in positive territory this year was to be in gold and gold-related investments. Go for the gold. As a certain notable member of the resource investing community likes to say, you've got to be in it to win it.

This is really, really going to be a fun ride. Stay tuned.

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