Up market, but Main Street still feels downPosted: Updated:
Wall street jumped a giant hurdle this week, but it buzzed by with any fanfare... The dow topped 11,000 for the first time since fall of 2008.
But, if Wall Street is bouncing back, how come it seems no one is paying attention? Financial planner Jacob Gold says it has a lot to do with emotion, “When the recession is entering this cycle of downward contraction it is on the front page of every paper, because people are concerned, they are trying to quantify the what if…what is the worst case scenario.”
Gold says the worst case came in march 2009, when the market hit bottom, just above 6,500, but adds, “Since then the S&P 500 is up some 74%.” But also since then unemployement has actually gone up, forclosures have continued, and bankruptcies are on the rise, leading many to ask, "what gives?"
Gold says it is actually simple, “ What people need to realize is that Wall Street is a leading indicator of what is to come in the overall economy, whereas Main Street, aka unemployment data is a lagging indicator. “
And Gold says while that might not seem like great news for those struggling right now, the Wall Street boom, really is something to get excited about, “Execuitives are getting more optimistic about the future and what the predict they will be able to sell as part of their product line. “
Gold says that has a lot to do with a high demand for many products in other parts of the world, and he says US corporations are in a strong position to move forward, “Because of the demand around the globe. As time continues, and that stability remains…corporations will be in a position to start hiring to keep up with that demand. “
Another reason, Main Street might not feel as optimistic; they have not necessarily seen thier investments go up as much as the dow. Gold says that's because many people may have sold on the way down, and not gotten back in... “So a lot of investors waited to long to get out, and they got in a little too late.
And they missed out on that upside or at least a percentage of that. “ Your best strategy: a mix of stocks, bonds and cash in your 401-k or retirement savings. And Gold says remember, the markets are still volatile, but, that is not a call for panic. “Wall Street is going to do what it does, and you need to do what you do.
And that is maintaining your household, looking at your finances and making sure you are always healthy financially and physically. “ Gold says he expects to see unemployment and foreclosure rates to remain high for some time, but he says if that optimism remains at the corporate and investor level, Main Stree will catch up.