So the dow has Actually risen 7% a year since then? ;-) Not exactly Harry Dentesqe...

Ha. Well, it ain't a rocket ride, but it's also hard to square 7% a year with "a rate cut won't work" -- unless, of course, you mean it won't recreate the go-go days of 1998.

You forgot the part about letting people buy houses with no money down. Things didn't really start "working" until then.

Not exactly in a straight line --

The Dow was over 11,000 in 2001, and didn't bottom until October 2002/March 2003, at about 7,500.

So while its higher now (thanks to a combination of elpased time, low rates, good corporate earnings and lots of inflation) the process to get there was quite convoluted -- and certainly not in a straight line.

Wait, come on...where are the "why should I bail out people who didn't read the fine print when I was smart enough to rent" comments?????

It's not only not a rocket ride but it's below the long term average on 9% to 10% per annum. As far as rate cuts, Greenspan took them down to 1%, producing Da Bubble(s) we have now. Interest rates at 1% would work again, I predict.

So I guess the thing to do in August 2001 was buy with both hands, right? You would have been carried out on a stretcher.

If the Fed Funds Rate goes to 1% again (and it probably will), you can be sure that the market will eventually recover... but don't think it won't come at a price.

And Barry Ritholz stayed bearish during that whole 50% rise, reciting those bromides like "Fed is pushing on a string." Then when the Dow drops 2% after rising 50% he acts all cool.

Pete,

Your comments are painfully irrelevant to the discussion at hand. I normally don't address troll-like comments on other people's websites -- but since you stated something factually wrong, here is my correction:

I have been bearish on the US, and have been expecting a major economic dislocation, with Housing at its root, for quite some time.

However, clients don't pay us to sit in cash. I have been long oil and related stocks since 2001, Gold since 2002, and overseas stocks since 2003.

Anyone holding these assets classes dramatically outperformed the S&P500 over the same period.

I have also held the occasional US stock. I did bought major U.S. indices in June 2006, but held them for less than 2Qs. There has been simply too much risk in the US, and too many better opportunities elsewhere. (We are big beleivers in risk adjusted returns).

This is Paul's blog, not mine, so I will leave it at this. But please, learn to think for yourself and not just repeat the stupidity of others. . .

Mr. Kedrosky, the phrase "since which time the Dow has climbed almost 50%" is misleading, really false. An accurate statement would be "since which time the Dow has climbed ca. 25%, leaving it in inflation-corrected terms, unchanged."