Observations: February 2012 Stock Market Update

Wednesday, February 29, 2012

February 2012 Stock Market Update

Stock market (DJIA) monthly performance / closing prices for last 12 months

Dow Testing 13,000

In February, the Dow reached not only a new 52-week high but a multi-year high, besting 13,000 for the first time since May 2008. After failing multiple times, the Dow finally closed above 13,000 on February 28th, but couldn't hold on through month-end.

The lack of market volatility continued. Again there was not a single +/- 2-3% day, and only once did the Dow move more than 1%. The DJIA (Dow Jones Industrial Average) just quietly continued its apparently inexorable march upward, ending the month
at 12,952.07. (See chart above. Click to expand.)

Where are we Now? February, Year-To-Date & Recovery-To-Date Review

Here's where we stand vs. some key dates and milestones:

From All-Time High of 14,165 on Oct 9, 2007: the Dow is down 1212 points (8.6%)
From Crash Low of 6547 on March 9, 2009: Up 6405 points (97.8%)
From one year ago close of 12,226 in February, 2011: the Dow is up 726 points (5.9%)
From the New 52-Week High of 13,005 on Feb 28, 2012: down 53 points (0.4%)
From the 52-Week Low of 10,655 on October 3, 2011: Up 2297 points (21.6%)
First Quarter & Year-to-Date From 2011 close of 12,218: The Dow is up 735 points (6.0%)
From Prior Month Close of 12,633: Up 319 points (2.5%)

For other recent results, see 2011 End-of-year stock market results, January 2012 stock market results, and March 2012 stock market results.
Note: At the end of the crash, the Dow had lost about 54% of its value (from the all-time high). For an explanation of how it can be up over 90% since then and still be below the all-time high, see The Importance of Avoiding Large Losses.

The Next 10 Years

My stock market projection model continues to project below average 10-year returns. The preliminary 10-year projection is in the neighborhood of 5.0%/year. Since my model is earnings based, I'll have to wait for 2011 earnings data before finalizing the projection. I'll post a formal update around the end of the first quarter.

Related Articles & Posts

100 Years of Stock Market History: Bigger perspective on "Where are we Now?." Includes 100-year chart and discussion of the long flat periods.
Dow Yearly Returns: 1929-2011 : bar graph of yearly total returns (i.e., including dividends)
What has the range of returns (minimum & maximum) been for 1,2, 3, ... 100-year periods?
10-Year Stock Market Projection shows how expected returns have changed over the last 10 years.
100 Years of Interest Rate History: graph of Treasury Note interest rates since 1900
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
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Copyright © 2011. Last modified: 4/1/2012