Stocks in Germany, UK, France, Italy and Spain plunge below year 2000 levels: Horror shows to buy and hold
Food for thought in light of the biggest stock market bubble in the United States.
By Wolf Richter for WOLF STREET.
Major European stock indices have plunged below their bubble highs of more than two decades ago. That don’t mean they dived this a lot this week, but that they had finally surpassed their previous bubble highs of more than two decades ago, fueled by money printing, and then they plunged.
German stocks. The most quoted German stock index, the DAX, is a total return index that includes dividends and is therefore not comparable to a price index such as the S&P 500 index, which does not include dividends. But the less often cited DAX Kursindex (DAXK) is a price index and does not include dividends, and is comparable to the S&P 500 Index and most other major equity indices. So that’s what we’re going to use here.
The DAXK plunged 4.4% on Friday, and 10.1% for the week, to 5,517. Since the all-time closing high of 6,873 on January 5, 2021, it has plunged 19.7%. But wait… that all-time closing high was only up 10% from the March 2000 bubble peak – yes, that bubble that imploded 22 years ago. And on Friday, the index closed 11% below the peak of the March 2000 bubble. Note the gigantic volatility that investors have gone through over these 22 years to find themselves below where they started.
UK stocks. Britain’s FTSE 100 price index fell 3.5% on Friday and 6.7% for the week to 6,987. The index is now down 10% from its all-time high in May 2018 But wait… Friday’s close is slightly down from the December 31, 1999 close, which was the bubble high 22 years ago, and now the index is back:
French stocks. The CAC 40 price index plunged 5.0% on Friday and 10.2% for the week, to 6,062, and is down 18% from its all-time high in January 2021. But wait …yes, the index has now fallen 12% below its bubble high in September 2000. And note the horrible volatility investors have had to endure to get nowhere:
Spanish stocks. Spain’s IBEX 35 index fell 3.6% on Friday and 9.0% for the week to 7,721, and yes, for buyers and holders, this stock market has been a total 25-year nightmare. On Friday, stocks fell to the lower end of the 25-year range, to a level already seen in 1998. The index is now down 52% from its peak in December 2007:
Italian stocks. Italy’s FTSE MIB index plunged 6.2% on Friday and 12.8% for the week. This horror show is now down 55% from the March 2000 peak, and back to where it was in the 1990s – as my data only goes back to December 1997, and even then, l he index was even higher than today. Another great market for buyers and holders to eliminate:
There are a bunch of other stock indices around the world, including big indices like the Japanese Nikkei 225 and China’s Shanghai Stock Exchange, which are now below their bubble levels from a very long time ago. many years.
This shows that for many major stock markets around the world, buy and hold only works if you buy low and hold until prices are high, then sell before they dip again. So basic market timing. Otherwise, you could be screwed for decades, or possibly the rest of your life – the Nikkei is still down 33% from that 1989 bubble peak. Once those mega-bubbles implode, the stock markets may not see their old highs for decades. Food for thought.
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