By Daniel Wilcock
The American stock market, as measured by both the Dow Jones Industrial Average and the S&P 500, closed yesterday at its highest level since December 2007.
Ordinarily, as a low-cost index investor, I agree with market sages such as Burton Malkiel and John Bogle, who caution investors not to pay much attention to the daily soap opera of market fluctuations. But somehow this particular milestone means something to me.
In April of 2008, I relocated to the States from Japan, where I’d been living the previous two years. Luckily, I found a nice writing job at Georgetown University (a relatively safe harbor within stormy seas) shortly before the markets went to hell and employers started shedding their payrolls. When the Lehman collapse happened, I can clearly recall the indexes going down 5% each day for several consecutive days.
Those dark days always made me flash back to the summer of 2007, when my wife and I took a honeymoon in Finland and Denmark. Each day, I had the luxury of perusing the International Herald Tribune in a leisurely way. That splendid summer, the financial news was filled with warnings of a coming market catastrophe, evidenced by the failure of some mortgage-related funds at Bear Stearns. Yet the market continued to go up in the following weeks.
We may be approaching a conclusion to those days of frozen credit and a hemorrhaging housing market. In my opinion (which I admit is quite different from Wall Street types), The Consumer Financial Protection Bureau is leading our housing and credit economies to a brighter future. In this regard America may be learning something from Canada, which didn’t have a mortgage crisis.
But what about the 8% of workers in America and more than 50% of young people in countries like Spain who wish to enter the workforce, but can’t find their way? I’m looking for ways to be optimistic about the future of labor in the new era we’ve entered. B corporations and the GIIRS index inspire me, as do companies and organizations that take environmental and community sustainability seriously.
The market’s return is an indicator of our collective wealth. The unemployment problem is an indicator of our collective poverty. My hope is that our markets will evolve and bring their productivity to bear on the social and environmental problems we face.
Idealistic, yes. Naive, perhaps. But optimists live better lives.