While the Dow Jones Index and broader markets are recovering from their lows set on Friday, the worst is still yet to come. Investors need to realize that stock market indexes don’t fall in a straight line. Also, there is also the possibility that the Dow Jones Index could surpass its previous high of 26,600 points. Only time will tell.
However, the leverage, margin and insane valuations in the markets are still in way out of whack. Just because the Dow Jones Index has added 1,200 points from its lows in early Friday trading, it is still 2,000 points below its peak of 26,600. Furthermore, when the Dow Jones peak at 14,100 points in 2007, it took six months and three different peaks before the index started to fall off a cliff in 2008.
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