Dow Falls to 2002 Levels – Where Do Investors Go?

February 19, 2009 at 2:16 pm by Tom Lydon      Bookmark and Share

Dow Jones ETFThe Dow Jones Industrial Average has fallen to its lowest close in more than six years, leaving exchange traded fund (ETF) investors to wonder where they can go now.

It’s a setback for investors who hoped that Nov. 20 was going to mark the market’s low point, say Stephen Bernard and Tim Paradis for the Associated Press.

The market can’t seem to rally back, which signals that the recession’s end could be further off than we think. It’s already 14 months old, and is one of the most severe in decades.

Thursday’s worries centered on financial and technology stocks. Financial Select Sector SPDR (XLF) lost 5.3% today.

Where do worried and nervous investors go? They’re popping up in traditional safe-havens, such as gold, and also spilling over into other precious metals such as silver and platinum. We discussed what’s happening with silver on Fox Business yesterday, and talked about gold and platinum on CNBC early this morning. It should be noted, though, that even these funds declined today: SPDR Gold Shares (GLD) lost 1.2%, while iShares Silver Trust (SLV) lost 2%.

Treasury bond ETFs couldn’t even get a break. Melinda Peer for Forbes notes that concerns about towering supply trumped the flight to safety. Investors were worried about bond auctions. The Treasury said it would sell $40 billion in two-year notes next Tuesday, and $32 billion in five-year notes on Wednesday and $22 billion in seven-year notes on Thursday.

The iShares Barclays 10-20 Year Treasury Bond (TLH) lost 1.1% today, and it’s currently yielding 3.8%. This reflects lower prices on longer-rated bonds.

For full disclosure, some of Tom Lydon’s clients own shares of SLV.

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  • Investors have lost trust in the market. So it may be tough to see these low levels, but they aren't going to get any better until trust in the market is restored.

    It's no surprise people are flocking to platinum and other precious metals. They're about the only safe haven we've got right now (not to mention the many bullish factors rooting for precious metals). Heck, there are shortages of platinum and other valuable metals in some countries.

    With record level government spending and gold, silver, and platinum breaking out of their price bases, I can only assume the precious metals bull market is just getting going. This would be a good time to buy on the dips.

    Happy Investing.
  • I have been watching the dollar and gold for some time, and it looks like they are at a potential important place. I would like to see gold pull back around resistance, before any serious blast off occurs, such as making new highs over it's 2008 highs.
    I suspect however, if the markets start taking a serious beating soon, both the dollar and metals will take off to the upside in response.
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