I Hope You Didn't Sell All Your Stocks

Wall St. logs biggest two-day gain since financial crisis

I Hope You Didn't Sell All Your Stocks

US stocks end sharply higher after afternoon surge

How Low Can You Go?

From Penny Stocks? Small Change For Big-name Companies:

_ General Motors shares have fallen from $30.30 to $2.22, less than the cost of a standard spark plug (about $3.79).

_ New York Times Co. shares have fallen from $24.27 to $3.95, cheaper than the $4 cost of its Sunday edition.

_ General Electric Co. shares fell from $30.30 to $9.08, cheaper than a GE two-slice bagel toaster at Wal-Mart, selling Tuesday for clearance price of $12.

_ Office Depot is down from $38.27 to $1.26, less than a 12-pack of medium point Papermate BallPoint Stick Pens that run $1.89.

_ US Airways has fallen from $53.89 to $3.66, less than the current $4 cost of two in-flight coffees.

Yield

In 1958 the stock markets yield dropped below the yield of bonds. It stayed that way for fifty years. Until now.

From Stocks vs. bonds by Mark Hulbert:

But what is the "proper" relationship between bond yields and dividend yields? Is today, along with the period prior to 1958, "normal" -- and the last 50 years the exception? Or is it just the opposite.

The memory of the Great Depression lingered for years after it ended, for example, which is one reason why stocks' dividend yields remained so high.

In contrast, the Baby Boom generation (at least possibly until now) had no traumatic memory similar to their parents' memory of the Great Depression. That in turn helps to explain why stocks' dividend yield slipped in the 1960s and beyond, relative to bonds' yields.

The bottom line? If enough investors become sufficiently traumatized by what's going on right now, and as a result more or less permanently expect stocks' volatility to remain a lot higher than bonds' volatility, then stocks' dividend yield is likely to remain above bond yields.