For those who thought that the Dow had bottomed out in the low 8000’s, last week was a real migraine. The Dow closed the week at a 6-year low. The Bear has returned just when we thought it was safe to go back into the stock market forest.

Some say it was the talk of nationalizing the big banks that frightened Wall Street out of circling around the low 8000’s. The much-reported on Dow Jones Industrial Average consists of 30 blue-chips stocks. Friday, it closed at 7365.67, down 6.2 percent for the week, but, on Thursday, it dropped past the Bear-Market low we reached on Nov. 20, 2008 and hit its 6-year low. When the Obama administration said it was of a mind to keep big banks in private ownership, the market seemed to pause its downward slide, even recovering just a tad.

The two prime candidates for Nationalization are Bank of America and Citigroup. B of A ended at just under four ITunes songs per share – $3.79; Citi, at an equally appalling number just shy of two ITunes songs per share – $1.95! These are prices that startups and old, tired, broken-down companies on the way out trade at, not the behemoth bedrocks of our financial system. And, you thought B of A was a great buy at $18 per share last Fall; congratulations if you didn’t phone that one in.

The Dow Jones Industrial Average, a/k/a the “DJIA,” “Dow 30,” “INDP,” the “Dow Jones” or “The Dow,” itself goes by the symbol “DJI” on the New York Stock Exchange. On October 11, 2007, it was at the lofty peak of 14,198.10, and Friday, it hit its low at 7,249.47, before taking a breath and moving up just slightly on the signal from the Obama administration that private ownership would trump nationalization, at least for right now. Imagine if you and your 401k had had the foresight, and luck (don’t ever discount the “luck” factor!) to have sold your portfolio at the 14,198.10 peak! Few did, because nobody ever knows what the low or high will historically be until they see it in the rear-view mirror.

Charles Dow (1851-1902) was a 19th Century journalist who co-founded Dow Jones & Company along with Edward Jones and Charles Bergstresser, along with launching a small financial newspaper you may have heard of: the Wall Street Journal. Mr. Dow also created the DIJA, based on his research into how markets move. He also created what is known as Dow Theory, a forerunner of many of the theoretical underpinnings of today’s modern and incredibly complex financial markets. Mr. Dow was a busy fellow in his relatively short life.

The DIJA is a price-weighted, scaled average calculated based on prices of stock prices in 30 US public companies, usually the best and brightest and most widely held, in order to produce something designed to be a reliable indicator of where thousands of publicly held companies are going: up or down. The day when the 30 component companies were actually "industrial" has long since passed. A “scaled” average is used rather than the actual average of prices—which means (arithmetic alert!) that you add up the sum of the all the 30 component stock prices, then divide them by a “divisor,” and the divisor is what changes, to reflect when one or more of the component stocks splits or has a stock dividend, all in order, again, to be an accurate reflection of what is really going on. Whether that goal of accuracy at a glance is truly achieved has long been the subject of debate.

The DIJA was first published in something charmingly called the “Customer’s Afternoon Letter” on May 26, 1896; the index stood at 40.94, and was comprised of only 12 stocks – the only modern survivor from the 1896 list of 12 still standing today by the same name is General Electric. The others were engaged in a wide range of the kinds of industries which were dominant in the 19th Century and some are still represented in the DIJA 30 stocks under merged names, like “United States Rubber Company,” which re-named itself as “Uniroyal” back in 1961, then merged into B.F. Goodrich in 1986, and, finally, was purchased by Michelin in 1990. Others, such as “U.S. Leather Company,” ended its corporate life in 1952. Still others, bearing old names since then associated with toxicity, like “National Lead Company,” later became “NL Industries,” but has been off the Dow Jones Industrial Average since 1916.

Here’s a sobering thought: the DIJA, over the course of the 20th Century, averaged 5.3%, compounded annually – a return that many would truly long for right now – called "a wonderful century" by Warren Buffett, who also calculated that, in order to achieve that kind of return over the 21st Century, by the year 2100 the DIJA would have to approach 2,000,000! Good luck with that.

Right now, some are calling for the DIJA to slip into the 6000’s, or even lower, before this economic mess bottoms out, reflecting a lack of confidence in the whole global financial system right now. That utter dearth of warm, fuzzy feeling and confidence is perhaps best capped by George Soros’ insomnia-inducing comments late last week: “We witnessed the collapse of the financial system . . . It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom. . . .” Paul Volcker, former Federal Reserve chairman and now a top adviser to President Obama, added: “ I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Reuters reported last Friday morning, also summarizing Soros’ comments at a Columbia University dinner as: “the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.” Let’s hope they are both wrong.