Dow 11,000

This week we saw the US Stock Market indexes reach levels seen about 18 months ago. The Dow Jones Industrial Average reached 11,000 and investors rejoiced. It seemed like people were fixated on reaching this level like it was reaching a major milestone.

The economic news that was reported was mostly good and the Dow went over 11,100. It seemed like good news parade was going to continue. On Friday, the storm clouds rolled in as the SEC charged Goldman Sachs for their actions with the Subprime Mortgage debacle. All of a sudden investor sentiment did a reversal and now the mood is negative and the Dow dropped wiping out most of the gains for the week.

My view of the Goldman Sachs news is people should go to jail for their actions. In fact, others who acted in a similar manner should go to jail. The key issue is having a market that is fair for all and it is illegal for a few people to profit while harming the public.

So the news that was the most important last week was improving economic news not Goldman Sachs. It does show that an investor with a short term time horizon will focus on the Goldman Sachs news and get caught up in the emotion of the event. An investor with a long term time horizon will focus on the improving economic news and maintain course.