Wednesday, April 28, 2010

Crossing the S&P 500's Rubicon

Here's a list of dates when the S&P 500 crossed above the 1200 level.

1. 12/21/1998
2. 4/18/2001
3. 7/12/2001
4. 7/26/2001
5. 12/14/2004
6. 12/21/2004
7. 2/4/2005
8. 2/11/2005
9. 2/24/2005
10. 6/1/2005
11. 6/9/2005
12. 6/13/2005
13. 6/28/2005
14. 7/5/2005
15. 7/8/2005
16. 10/31/2005
17. 9/16/2008
18. 9/18/2008
19. 9/25/2008
20. 4/14/2010
21. 4/20/2010

The S&P 500 closed today at 1191.36 . Can't you just feel the excitement in the air? Once we cross 1200 for the 22nd time, there's probably no turning back.

Source Data:

Yahoo: S&P 500 Historical Prices


mab said...


Once more unto the breach, dear trends, once more......

Straining upon the start. The game's afoot:

Follow the hot money, and upon this charge

Cry bonuses for Goldman, Morgan, and Wall Street large!

Stagflationary Mark said...



’Twas brilliant, and the slimy goals
Did fire and layoff in the wake;
All flimsy were the borrowed homes,
And the loans' wrath outraged.

“Beware the Goldman Sachs, my son!
The debt that bites, the clause that catch!
Beware the risky stocks, and shun
The frail Commodities!”

Don't worry. It's just a "nonsense poem" I've recited from memory. It isn't supposed to make any sense.

mab said...


Don't worry.

A few developments this week have really eased my unease.

First, I received another credit card offer from Capitol One. It had been about ten days since the last offer and I was starting to feel neglected. I really enjoy tearing up junk mail from bailed out banks.

Second, I received two home equity offers in the mail from banks I had never heard of. The banks don't even know me but were gracious enough to offer me five year loans at ~ 5.25%. It must be the banking system's way of spreading the cheer from quantitative diseasing. Ya know, pushing debt...I mean getting credit flowing again.

Anyway, at 5.25% fixed for five years, it doesn't look like banks are worried about hyper-inflation.

Bernanke can stuff banks chock full of reserves, but it's unlikely I will ever, ever take on debt again. Will Bernanke cross the zero bound (Robert) RubinCON?

Sorry about the "CON". I couldn't resist.

Stagflationary Mark said...


I'm going to supercharge your easing of unease.

Check out this offer in my inbox. It's from ING Direct.

Want to take a shortcut to owning your home sooner? With a 5-year fixed rate loan at 3.75% (3.78% APR) and free bi-weekly payments, you'll own your home faster and save money along the way.

First, what exactly are "free bi-weekly payments"? I have no idea.

Second, I could borrow that money and simply invest it in 5-Year Treasury notes yielding 2.49%. Think of the money I wouldn't make!

If only I could leverage it somehow to maximize my potential losses.

Hey. Palladium is on fire. Maybe that's the way to go. It's already tripled off of the bottom (just like it did during the dotcom bubble before it crashed and the real estate bubble before it crashed).

Baby needs new palladium shoes!

The sad part is that I was tempted to buy Palladium the last time it crashed. I was walking around the house telling my girlfriend that I was tempted anyway. I figured I'd already made money on precious metals once and didn't want to push my luck though.

In any event, even with real yields on Treasuries as microscopic as they are now, I'm no longer tempted.

AllanF said...

Mark, Biweekly payments are a scam whereby you pay the lender 1/2 of your monthly payment every two weeks. As there are 26 bi-weeks in a year, you end up making two extra 1/2 payments toward principle per year. When this idea first came about lenders (or more correctly servicers) double scammed by charging borrowers a one-time set-up fee of $100 to provide the biweekly billing.

The thing is, a person can make an extra principle payment anytime they wish. I suppose if one has no budgeting, planning, or saving ability this, like having the IRS withhold an extra amount from your paycheck, is a good thing if it will get you to save a little bit extra. But sheesh are there no adults left in this once great country!?!

The other thing is, biweekly billing is NOT biweekly amortization. Biweekly amortization, especially at higher interest rates, actually does make a difference. My understanding was biweekly amortization was a marketing/competitive angle some smaller banks used back in the 70's and 80's (also made practical by ubiquitous micro-computers). Securitization and low interest rates have since scotched that offering. I suspect if you asked for a biweekly amortized loan today you'd be met with blank stares. Maybe if you went to a Credit Union with a quaint older lady you'd be politely told they haven't had any of those "in years."

Otepoti said...

I think you forgot a snark tag?

Your headline makes me think of the old hymn line-
"When I tread the brink of Jordan
Bid my anxious fears subside"...

Stagflationary Mark said...


Thanks for explaining the "free" bi-weekly payment concept. People actually paid extra money for that? Good grief.

Stagflationary Mark said...


Thanks for pointing that out. I try to use the "sarcasm" tag to pull double duty. I have therefore never actually used the "snark" tag.

Your question got me to thinking though and this is what I found.

Irony mark

The irony mark or irony point (؟) (French: point d’ironie; also called a snark or hook)...

Invented by Doug Sak as a promotional stunt, the SarcMark (short for sarcasm mark), is designed to show when passages of text have a sarcastic tone. It resembles a cross between the @ symbol and the exclamation mark.

SarcMark? Hey! I resemble that remark!

A month after the introduction of the SarcMark, a group called Open Sarcasm published a manifesto...

Open Sarcasm

I Can Has Cheezburger

Hahaha!!! It all makes sense now! ;)

GawainsGhost said...

I never heard of this bi-weekly payments plan, but there is nothing free in this world. It sounds like just another financing scheme to me.

What people do not understand is that on a mortgage the interest is front loaded. In other words, you pay for the money you borrowed before you pay for the house you bought with it.

Say a monthly payment is $1000. $750 goes to interest, $225 to taxes, $25 to principal. At that rate, it takes years to build equity. Of course, more of each payment goes toward principal as you pay off the interest, but that takes time.

So what most of these financing schemes really are is a way for the lender or servicer to continually keep you paying front-loaded interest, while building little to no equity.

AllanF said...

People actually paid extra money for that? Good grief.

Um, yeah. Blood relatives in fact. It was a little uncomfortable at first when I started dressing them down over it. In their defense, the marketing was very slick on it. And it does result in a 30 year loan being paid of some 7 years earlier. My problem is the "savings" is 100% from the borrower accelerating their principle payments. Basically, the servicer is offering them a 23 year payment plan on a 30 year mortgage and saying "Wow, look at all the money you'll save on interest". Big deal. How about I take a 15 year mortgage and you compute how much money I'll save on interest.

Stagflationary Mark said...


You might find this interesting from last year. I came up with a "what do you want your payments to be" model to describe housing prices.

Housing Price Simulation

Stagflationary Mark said...


For what it is worth, I paid off my house way early. It was the late 1990s. My tax preparer was not exactly happy with my decision. I was paying about 7% on the mortgage. She felt I could do better than that in the stock market. Hindsight is being rather kind to me on that one!

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