WSJ Reader Dow Jones Forecast
By Barry Ritholtz - November 10th, 2009, 9:45AM
The Wall Street Journal polled its readers as to where the Dow Jones Industrial Average would be at the start of 2010.
I wonder if the polling results were somewhat skewed by yesterday’s market action? Human Psychology suggests that most people are not comfortable bucking the crowd, and might be more inclined to vote positively than they would otherwise during a rally.
Here are the current results:
>
November 10th, 2009 at 9:45 am
I voted higher, but that put the dot on the left — the symmetry was all wrong.
For the purposes of illustrating the graphic, I changed the vote to lower.
November 10th, 2009 at 9:57 am
The more pertinent question is:
Since the majority, 63.6, sees it at higher or the same, and the minority, 36.4, sees it lower, when were the herd ever right?
Or is it really, really, truly different this time?
I’m with the minority.
FULL DISCLOSURE: I have lost over $10,000,000 in my FX, OpEx, and GCI practice accounts in the last 6 months.
~~~
BR: Good thing they were practice accounts!
November 10th, 2009 at 10:29 am
From http://bit.ly/QwfFG last week:
November 5, 2009
While I remain bearish over the longer term as far as the stock market is concerned, there seems to be so much negativity surrounding stocks that I have to wonder about their immediate future. Anytime too many people seem to be embracing the same sentiment the contrarian in me gets a bit nervous.
Today the major indices were up in the 2 to 2.5% range. The last hurrah of the bear market rally or is there still some potential on the upside?
Over the short term, there is a lot riding on the October non-farm payroll data released tomorrow at 8:30 AM EST. The consensus is a loss of 175,000 jobs and an unemployment rate hitting 9.9%. The consensus range sees job losses of 55,000 to 200,000 and an unemployment rate between 9.9 and 10.1%.
Anything substantially above or below these numbers will move the market accordingly but I’m starting to get a nagging feeling that, outside of any major setbacks with employment or earnings, the market has some more to go on the upside in order to turn a few more bears into bulls. Another run at S&P 1,100 may be just the catalyst needed.
- Van Schaik
Apparently I overestimated the negativity. If the majority in the WSJ poll says the market will show gains, or at least stay the same, by the New Year, any prudent investor will start taking profits while the profits are there for the taking.
November 10th, 2009 at 10:55 am
Bucking the crowd, WTF, come on Barry, the trend is your friend………till it isn’t.
And BTW I vote lower since the crowd will head for the door by 12/31 for tax reason/season.
November 10th, 2009 at 11:00 am
In order to respond to the poll, I think, first, you must determine where the USD will be trading at that time. Gut tells me we are on the cusp of a large USD rally. I trade various physical commodities.
Based on the demand/price ramp, I have seen since May-July, when huge volumes cleared the market (all based on easy money Letters of Credit thru Chinese banks financed with 180 day/+ usance terms at Libor plus 30-100bps)…..there appears to be a much larger than usual demand for USD coming, in the near future to settle these trades. Virtually my entire book of business/trades reflects an abnormally large amount of usance drafts coming due at/around end year (certainly pre- Lunar New Year). I can’t imagine that I operate in my own microcosm…as such, there seems to be merit playing for a large, albeit short-lived move to the downside in the next 8-10 weeks.
November 10th, 2009 at 1:23 pm
Zippy The Stock Picking chimp just threw a dart at that chart and it hit the bar on the