Saturday, January 01, 2011

World Stock Markets End 2010 at 27-Month High

The Morgan Stanley Capital International (MSCI) World Stock Market Index closed out the year by reaching a 27-month high of 1280.07 yesterday.  This was the highest closing index value for world stock markets since September 19, 2008 in the wake of Lehman Brothers' filing for bankruptcy on September 15, and the subsequent financial meltdown caused the MSCI World Index to drop below 700 by March 2009 (see chart). As I reported previously, it's a significant milestone that world stock markets have now returned to their pre-Lehman levels.

7 Comments:

At 1/01/2011 4:56 PM, Blogger juandos said...

"...reaching a 27-month high of 1280.07 yesterday"...

I know this is going to sound silly but what does this high really mean in real cumulative wealth?

Is the actual worth of the stock market index higher now than when you posted this back in May of '09: Bull Market Rally in World Stocks; Largest 3 Month Gain in History of MSCI World Stock Market Index?

Obviously the numbers are different but what about the 'real' wealth of today's index vs then?

 
At 1/01/2011 5:45 PM, Blogger Buddy R Pacifico said...

This is the most important stock market index in the world. A new global wealth effect should be setting in and portend an overall strong 2011.

 
At 1/02/2011 4:06 PM, Blogger juandos said...

"A new global wealth effect should be setting in and portend an overall strong 2011"...

But is there any real wealth there in those numbers?

 
At 1/02/2011 7:04 PM, Blogger VangelV said...

The equity markets have lost value against gold and most commodities and the trend seems set to continue for quite some time. The MSCI looks good because it is denominated in a fiat currency.

 
At 1/03/2011 11:41 AM, Blogger Evil Red Scandi said...

VangelIV nailed it - it's not that the stock market is recovering, it's that currencies are being devalued.

 
At 1/03/2011 8:49 PM, Blogger Hydra said...

How long before we are back in a bubble?

If currencies are devaluing, borrow as much as you can, and buy something substantial. Get a bulldozer and park it.

 
At 1/03/2011 11:44 PM, Blogger VangelV said...

How long before we are back in a bubble?

We never got out of it. The correction had to be greater but the Fed and Treasury would not permit a true liquidation to take place.

If currencies are devaluing, borrow as much as you can, and buy something substantial. Get a bulldozer and park it.

Nice in theory but very risky in practice. While the long term is pretty clear the markets can throw a curve your way. It could be that the USD has another huge rally as commodities and other currencies decline in the face of a EU collapse. (If California, Illinois and Ohio don't fold first.) That strategy would cause you to go bankrupt even if you were exactly right about the long term. A better strategy might be to borrow to the hilt, buy physical bullion and default in a crisis. By the time the process runs its course you can pay back the creditors after your holdings have exploded in value.

 

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