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Experts put little stock in Dow record as economic predictor

Economists are not known for being a particularly giddy lot, but some seemed to be downright over the moon earlier this week when the Dow Jones Industrial Average found its way to a new record high. In the 48 hours since that happened, though, more cautious voices have started to be heard.

It likely will come as no surprise to our readers in the Dallas area that these voices warn that we shouldn't be looking to the Dow to tell us whether the economy is doing well, or will likely do well in the future. Rather, they say it is merely reflective of a general optimism that is expected in connection with the overall recovering economy.

But even while the general economic trend is positive, there are many people still hurting from the recent Great Recession. For them, immediate debt relief through something like Chapter 7 bankruptcy may be the most viable means for achieving their own economic recovery. Checking with a bankruptcy attorney is the way to make that determination.

So what is the Dow good for? It depends perhaps on who you ask. Most analysts remind us that the stock market is on its face a volatile gauge. At its best, they say, it offers a reading of the pulse of investor attitude. In the case of the recent record, the analysts say it can be called a reflection of optimism. They say it can't be called a predictor of things to come.

For example, it's been noted that the last time the Dow peaked was in October 2007, and it was in December of that year that the latest recession began. In fact, some in the Federal Reserve say that some of the recent upward spirals in stock asset prices could be an indication that some stocks may be headed for a bursting of bubbles.

When it comes to the economy, individuals really have little control over what happens. They only have control over their situations are, here and now. Fortunately, if that situation involves financial struggles that indicate that bankruptcy might be called for, there are measures that can be taken.

Source: CBS News, "What does the Dow's record say about the economy?," Mark Thoma, MoneyWatch, March 7, 2013

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