Opinion

Why worry about S&P, Dow Jones?

Posted August 20, 2011 5:00 am

Throughout the media, far too much emphasis is being placed on two numbers that are not reliable sources of information regarding the current economic condition. Why should anyone, anywhere, place any credence in the judgment of Standard & Poor’s regarding the credit rating of the U.S. government?

After all, it was falsely inflated ratings for bundled mortgages that led to the worldwide collapse of the housing market. And why should anyone base their financial decisions on what is happening to the Dow-Jones Average? That number is no longer representative of investor’s conclusions regarding company leadership, policy, networth, and profitability.

Share price is controlled, not by the actions of long-term investors, but by traders whose only consideration is instantaneous profit. They use computer programs to buy and resell thousands of shares of stock with lightning speed. Highlighting the recently downgraded S&P rating and the falling Dow Jones average just creates unnecessary anxiety.

Donald G. Westlake

Wheaton

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