Q3 2008: A Historic Time

Here is a collection of graphics from the WSJ depicting a timeline of the markets, the performance of various major market indices and the performance of the 30 companies that make up the Dow:

First, a timeline of the Q3 performance of the Dow, including notations for various key events related to interest rates, the credit crunch, bailouts, et al.

click to enlarge

Here is a look at the performance of the major market indices over the same time period:

Here is a look at the performance of the components of the Dow over the course of Q3:

Ironically enough, despite the fact that the current crisis originated in the financial sector, it was the financials - especially if you remove AIG (AIG) - that out performed the rest of the Dow. Of course, it goes without saying that the financial companies in the Dow are (largely) the cream of the crop and stronger than the rest. Still, an interesting trend to be sure.

Needless to say, Q3 was a truly historic time that will be analyzed for decades, but the thing to remember is that it's not so much the crisis itself that's important; it's our RESPONSE to it that truly matters. When I think about the current response, it's not the response itself that bothers me, it's the fact that I don't see any momentum building towards long-term solutions that will prevent similar crises in the future.

Something I'm hoping for is a complete change in corporate governance, especially in the banking sector, where we as investors - as a society really - no longer allow corporate executives to behave as gamblers who can't lose. Because if we got that one change, a lot of other problems will solve themselves.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.