Checking through the annals of Lowbar history, I found that Howie first predicted doom for U.S. Stocks, most notably the Dow Jones Industrial Average (from this point forward referred to simply as "the Dow" for purposes of this discussion), on June 17, 2005. At the time of this prediction, the Dow was around 10600. The Dow went on to tack on a very meager 1% gain in the remainder of 2005, then a healthy 16% gain in 2006. Last Friday afternoon, it closed at 12767.57, a gain of 20.5% in 20 months. Any reasonable investor would be quite pleased to have a net return like that over a 20 month period.
Like natural disasters, sports outcomes, and the end of the world, if you keep making predictions, eventually you will be right. In the case of studying the stock market, there are a number of alarmists who get hung up in one or two "key" indicators that are said to be surefire signs of IMPENDING DESPAIR. The price of copper (now regarded by most to be an obscure indicator) and the Yen carry trade are two common ones. But if you want to follow the lessons of history, there is one basic one:
Over the long term, the market fluctuates up and down on an overall uptrend. Occasionally, there are significant and meaningful pullbacks...and a very significant one just occurred from 2000-2003. While there are always bearish blowhards and "key" indicators of exaggerated importance (just like there were people saying to stay out of real estate in Northern VA in 1999...WAY too inflated, right?), a bet against the Dow, particularly this soon after a "correction" of over 20%, is a bet against the house...in other words, a losing proposition much more often than not.
But keep predicting the doom, noble Howie, and eventually you'll see something that makes you feel like you were right all along. I am enjoying the returns on my meager invested pennies while I can.
