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December 10, 2007

Dow's October record: A Barry-Bonds-style asterisk?

That's what the New York Post suggests. Why? Because the only reason the Dow hit 14,164.53 on Oct. 9 was the fact that Dow financial members Citigroup and GE and the rest of the market were pumped up on subprime steroids. HT: Big Picture.

Critics of credit reporting agencies and Wall Street analysts say their failure earlier this year to properly warn investors about the possible extend of the subprime mortgage meltdown tainted the 14,164.53 record high of the Dow Jones industrial average.

Therefore, the critics say, the record high hit on Oct. 9 should carry a Barry Bonds-like asterisk - because it was reached unfairly.

"These were phantom Dow highs in that they were predicated on unrealistically low expectations of risk in the housing market," Christian Stracke, a senior strategist at CreditSights in London, told The Post last week.

"It was a fool's rally and a fool's record Dow high in October," snapped Chris Whalen, managing director of Institutional Risk Analytics. "This whole thing was built on colossal and very deliberate deception of investors with opaque products like CDOs."

Posted by Jay Hancock at 2:59 PM | | Comments (1)
        

Comments

This is why, before investing, perhaps people should do a little research on their own. And couldn't the very same thing be said about stock market highs achieved in the early 2000s?

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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