Burying the Dow's Lost Decade: Cramer
This post appeared earlier Tuesday on RealMoney. Click here for a free trial, and enjoy incisive commentary all day, every day.
We are not running in place. In fact, what we are doing is breaking out on the last laggard index out there, the
Dow Jones Industrial Average
, which closed the year 1999 at 11,497. Take a look at where we are: We have finally gotten back to where we were 11 years ago, although there was a heck of a lot in between.
Why focus on this number? Because for many people, we have been involved in a 10-year bear market, one that left us below where we were a decade ago, one that left us, without dividends being reinvested, in a lost decade of stocks. It's been a repulsive period for the alleged asset class of choice, one where gold's done so much better, where you made more money in bonds, where you would have done so much better NOT indexing ... at least to the Dow.
I think this is a very important milestone. I think it says that we have a chance for a fresh start in 2011, where we could break out of a range that has haunted us.
We've come a long way since the generational bottom in March 2009, a very long way. But the big-cap stocks have been a curse to portfolios everywhere, and the idea of saving for college with these instruments or retiring with them has gone out the window. We can't even believe that at one point President Bush wanted us to be able to handle our own Social Security with stocks. Can you imagine?
Every day I hear lots of talk that we've done nothing, but when I look at the Dow, I see lots of stocks that are now selling at very low multiples given what I think will be their growth rates in 2011. Just consider 10, 11 and 12 -- those are the multiples for
Intel
(INTC) - Get Report
,
Microsoft
(MSFT) - Get Report
and
IBM
(IBM) - Get Report
, even though I expect acceleration in earnings for all three. Does anyone think
GE
(GE) - Get Report
can stay down here with the acquisitions it is making and the dividend boosts? You virtually have to believe the Dreamliner will never get off the ground if
Boeing
(BA) - Get Report
is to stay at these levels. Sure,
Verizon
(VZ) - Get Report
has had a big move, but would it be so ridiculous to think that this stock could hit $49 again someday, where it went out 10 years ago, given that Verizon Wireless will soon have the iPhone and is about to start paying dividends to the parent company while the dropoff in landlines seems to have been stabilizing?
I don't want to say, "Damn the torpedoes, full speed ahead," but don't take the closing price of December of '99 lightly. If we are going to restore this asset class, it has to start doing better over a 10-year period.
Maybe, rather than thinking it is up enough, the move should be considered a relaunch from the quicksand of 1999, a time where stocks seemed to have so much promise but has led to so much disappointment.
At the time of publication, Cramer was long Intel and Boeing.
Jim Cramer, founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
Confessions of a Street Addict
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.