The unemployment rate is getting a lot of press these days as it increases. Yes, it is bad for those out of work but what does it mean financially for those concerned about their stock holdings?
The reason: because as the bad news surfaces, markets look ahead. The unemployment rate has continued to rise and peak historically - bad news - even though the market was looking ahead and recovering even as the bad news hit the streets.
Let's look at the last few times in the past 30+ years of history that the unemployment rate has increased during recessions and compare that to stock market returns based on the S&P 500:
1975 (high unemployment, 9%+) and the stock market return was slightly more than 31% that year
1982-3 (as unemployment peaked) and the stock market return was about 32% (combined for the two year period; 15% in 1982 and 17% in 1983)
1991-2 (another high unemployment period) stock market return was about 30% (combined again for the two year period with 1991 at 4% and 1992 at 26%)
The unemployment schedule I am working from can be found at the Bureau of Labor Statistics at this address: http://www.bls.gov/web/cpseea1.pdf
I encourage you to take a look at this site.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.