Updating “predictions”

Nine months ago, when there was a lot of excitement about the Dow touching 13000 points for the first time since the crisis began, I posted “What´s so special about 13000”? I ended the post writing:

So 13000 is just the “top” of a log running range. And that´s why investors feel the proverbial “chill in the spine”. As I mentioned a couple of days ago with reference to the S&P, “this stock market rally is not for real”. It´s just riding a “foamy wave of sentiment”. That´s been mostly true for the past 13 years. The “novelty” is that now the market´s “conduit” has been, believe it or not, inflation expectations. A hell of a “way to go”!

In the comment section of that post I answered a comment by Mike Sax in which I proposed a wager:

And I´m willing to wager that if monetary policy remains on the “side lines” in 6 months time the DOW will not be higher than 13000!

I “lost” that wager by about 100 points. But another three months on things have worsened again. The Chart illustrates the Dow on a weekly frequency since January 2011 with the dotted bar denoting the day the post was written.

Now I´m more cautious about a new “wager” because Nouriel “Doomsday” Roubini has said things are very likely to get worse!

As consumers, firms, and investors become more cautious and risk-averse, the equity-market rally of the second half of 2012 has crested. And, given the seriousness of the downside risks to growth in advanced and emerging economies alike, the correction could be a bellwether of worse to come for the global economy and financial markets in 2013.

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One thought on “Updating “predictions”

  1. Well, then there is James K Glassman who wrote “Dow 36,000″ back in 1999. Here we are 13 years later….

    Who says only liberals have fairytale utopian visions?

    And we can win in Afghanistan.

    Making predictions is hard, especially about the future.

    If the Fed and ECB and Bank of Japan adopt Market Monetarism, I predict Dow 36,001 !

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