A Few Wild Numbers on the Past Week

Most of us at The Motley Fool advocate ignoring short-term market moves. We focus on businesses, management, and valuation. We want good companies at good prices, and have a willful, almost religious, ignorance of market noise.

But sometimes the short-term movements get so wild that you can't help but stare. This past week was one of those times. Here are a few stats to put it all in perspective.

Monday was the first time in 15 years that every stock in the S&P 500 closed in the red.

Stock losses wiped out $3.8 trillion of paper wealth globally over the past eight days. That's more than the GDP of Germany.

The Dow is now down 11.6% from recent highs. Last summer's market correction saw losses of 13.5% peak to trough. Even 2005, when the economy was booming and housing was on fire, markets had an 8.5% midyear drop. Most would be surprised to learn how common these pullbacks are. It's an almost annual ritual. What's been wild about this one is how fast it came.

The yield on 10-year Treasury bonds is now 2.18%. The average over the past half-century is more than three times higher.

Monday was the eighth best day for 10-year Treasuries in modern history. Tuesday wasn't far behind. Some downgrade, S&P.

Between Monday and Tuesday, the Dow traded in a nearly 1,000-point range. The index traded at 1,000 as recently as 1983.

Bank of America (NYSE: BAC  ) now trades where it did in March 2009, when nationalization fears were rampant.

The VIX volatility index hit 48 on Monday. It's only been that high one other time over the past 20 years: during the 2008 meltdown.

Thursday's market drop was the ninth biggest point drop in history, or about the 100th largest percentage loss. Monday's rout was the sixth biggest point drop ever, or the 46th worst day in percentage terms.

Oil has plunged by more than $30 a barrel over the past few months, with most of the drop coming over the past week. In general, every $1 drop in the price of oil saves consumers $3 billion a year.

One hundred forty-seven companies in the S&P 500 index now trade at less than 10 times forward earnings, including Microsoft (Nasdaq: MSFT  ) , ExxonMobil (NYSE: XOM  ) , Wells Fargo (NYSE: WFC  ) , and Ford (NYSE: F  ) .

What did I miss? The Dow is still up 7% over the past year.

Fool contributor Morgan Housel owns shares of Microsoft, Exxon, and B of A preferred. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of Ford Motor and Microsoft. The Fool owns shares of and has opened a short position on Bank of America. The Fool owns shares of and has created a ratio put spread position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Ford Motor and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 10, 2011, at 5:03 PM, mracz425 wrote:

    Correction: Dow is up only .7% year over year.

  • Report this Comment On August 10, 2011, at 5:10 PM, TMFHousel wrote:

    ^Heh, was 7% when I wrote the article (says something about volatility). Was 5% gain + 2% dividend.

  • Report this Comment On August 11, 2011, at 1:58 PM, PJ37 wrote:

    Can I ask a beginners question. I am living in HK, but from the UK originally. I have some money sat in the UK and wanted to try buying some shares, I am thinking maybe BBL might be at a cheap price now. Anyway the brokers listed in the Fools find a broker, seem to require I have a US phone number and social security number. Can anyone suggest a good broker I could use to buy shares, should I go for a UK based one ? But some of the shares I am looking at are based on the NYSE. Thanks for any guidance.

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