‘Worst financial experience in history’ as S&P 500 dives 17%

The Standard & Poor’s (S&P) 500 index has lost 17 per cent since the start of 2000 after sinking almost 10 per cent this month, total return data compiled by Bloomberg show.

The decline would be the first in 70 years and exceeds the 8,9 per cent plunge in the 1930s, following the stock market crash of 1929, show data compiled by New York University’s Stern School of Business. “This is the worst financial experience in world history,” said Joseph Granville, the publisher of the Granville Market Newsletter.”The market is crashing.What we’re seeing right now is complete demoralisation.”The S&P 500 stood at a record 1 565,15 points one year ago, the peak of a five-year bull market that helped investors recoup losses from the dotcom bust at the start of the decade.Since then, the measure has tumbled 31 per cent, including dividends, as the collapse of the US housing market upended the economy, froze credit markets and saddled financial firms with almost $600 billion in mortgage-related write-downs and credit losses.The 12-month bear market pushed the S&P 500 to the lowest level since November 2003.Last month, Lehman Brothers, once the fourth-largest US investment bank, failed in the biggest bankruptcy in history.American International Group, the largest insurer, was seized by the Federal Reserve.Fannie Mae and Freddie Mac, the top buyers of US home loans, were taken over by the government.Although stocks lost money, 10-year treasury bonds returned 86 per cent this decade, according to data compiled by Bloomberg and Aswath Damodaran, a finance professor at New York University.The S&P 500 fell 0,1 per cent to 1 056,33 points as of 9.59 am in New York on Tuesday after Bank of America halved its dividend and announced plans to sell $10 billion of new stock.The economic fallout from credit market losses and bank failures has yet to approach the proportions of the Great Depression, when about 7 000 banks failed, according to the Fed.Between 1929 and 1933, the US economy shrank by 46 per cent, while one in four Americans were out of a job.Economists forecast US growth of 1,5 per cent next year, from 1,7 per cent this year.”You don’t cure a blast wound with a Band-Aid,” said a financial analyst.”It’s quite possible that the residue of all this damage could extend well through 2009.”Arthur Cashin, a member of the New York Stock Exchange for 44 years, says the speed and scope of the latest global selloff make the meltdown more dangerous and harder to contain than any previous crisis, after $25 trillion of market value was wiped out worldwide.The credit crunch “has become a financial forest fire”, he said.- Business Report”This is the worst financial experience in world history,” said Joseph Granville, the publisher of the Granville Market Newsletter.”The market is crashing.What we’re seeing right now is complete demoralisation.”The S&P 500 stood at a record 1 565,15 points one year ago, the peak of a five-year bull market that helped investors recoup losses from the dotcom bust at the start of the decade.Since then, the measure has tumbled 31 per cent, including dividends, as the collapse of the US housing market upended the economy, froze credit markets and saddled financial firms with almost $600 billion in mortgage-related write-downs and credit losses.The 12-month bear market pushed the S&P 500 to the lowest level since November 2003.Last month, Lehman Brothers, once the fourth-largest US investment bank, failed in the biggest bankruptcy in history.American International Group, the largest insurer, was seized by the Federal Reserve.Fannie Mae and Freddie Mac, the top buyers of US home loans, were taken over by the government.Although stocks lost money, 10-year treasury bonds returned 86 per cent this decade, according to data compiled by Bloomberg and Aswath Damodaran, a finance professor at New York University.The S&P 500 fell 0,1 per cent to 1 056,33 points as of 9.59 am in New York on Tuesday after Bank of America halved its dividend and announced plans to sell $10 billion of new stock.The economic fallout from credit market losses and bank failures has yet to approach the proportions of the Great Depression, when about 7 000 banks failed, according to the Fed.Between 1929 and 1933, the US economy shrank by 46 per cent, while one in four Americans were out of a job.Economists forecast US growth of 1,5 per cent next year, from 1,7 per cent this year.”You don’t cure a blast wound with a Band-Aid,” said a financial analyst.”It’s quite possible that the residue of all this damage could extend well through 2009.”Arthur Cashin, a member of the New York Stock Exchange for 44 years, says the speed and scope of the latest global selloff make the meltdown more dangerous and harder to contain than any previous crisis, after $25 trillion of market value was wiped out worldwide.The credit crunch “has become a financial forest fire”, he said.- Business Report