Saturday, February 28, 2009
I was wrong; I predicted Dow would fall to 7,000 by end of month; I was off 62 points; still waiting for same from NewsChannel 5 and Dave Ramsey
I have to admit it. And the record on this blog shows I wrote the following on Feb. 4:
What I can't understand is why so many people still today are so committed to greed and refuse to get out the market as it prepares to plummet to 7,000 on the Dow this month. And that will be this month -- as it heads down to 5,700 by the turn of the year or soon after.
The stock market(Dow Jones Industrial Average) did not fall from near 8,000 at the beginning of the month to 7,000 yesterday.
It finished at 7,062. So I was a tad off, as wealth was reduced 12 percent on Wall Street for the month.
Against others, however, that kind of guess looks good. Back in September 2008, NewsChannel 5 featured supposed financial guru Dave Ramsey on its 6 p.m. newscast. He told people to get into growth mutual funds. Then, the Dow was at 10,600. And I slammed the TV station for giving Ramsey an unquestioning forum to give such reckless advice to viewers.
Simple math will tell you that people who took Ramsey's advice through NewsChannel 5 have now lost 36 percent of their money. And now those people are being told by financial advisers to stay in the market because they'll miss out on a rebound, which in one day could go up like 1,000 points with the right circumstances and government report.
They also are being told not to certify their losses by getting out. It's only on paper as long as you don't sell. Gosh, that's twisted, but indicative of the undisciplined society we have become.
These poor people are indeed in a no-man's land. I wouldn't dare tell you now what to do.
Meanwhile, here is another prediction:
The Dow is going to continue down, reaching 6,000 by mid-Spring and close to 5,000 by year's end. Don't believe anyone who tells you to get into equities now to be ready for the upturn. If you do, then I have an Obama budget to show you that is actually going to significantly reduce the deficit by the end of 2012.
It's not. Yesterday's shocking GDP revision for the fourth quarter proved that.
Some people say don't use the Dow as a barometer for health of Wall Street and investments there. They say go to the S$P. Yes, it has 500 stocks compared to the Dow's 30, which includes former giants such as GM and GE, now in the single digits. Incredible.
But the S&P is too-weighted to the financials, which are headed toward even more pummeling than the Dow when the full extent of losses is determined. But we're all waiting on the Treasury Department to finally say what is a bad asset, home prices to settle at a bottom and Congress and Obama to say if there will be another TARP. Heaven help the taxpayer and investor.
So I follow the Dow. And I can admit when I am wrong, as with my February projection. I was off 62 points.
I'm just waiting on NewsChannel 5 and Dave Ramsey to do the same formally on the air at 6 p.m. on a weekday soon.