Andrew Burkly of Brown Brothers Harriman & Co puts out a list of significant numbers each January. Its a clever way to think about various aspects of the market and the economy — by the numbers.
These are his "8 Big Numbers" for 2008.
The S&P 500 Index needs to close above its March 2000 peak of 1552, as well as break its 2007 trading range of 1575 – 1370
to keep the structural bull market intact. An upside break of the range
would indicate that the volatile trading of 2007 was merely a
high-level consolidation. One indication that the bull market is back
in gear would be the number ofcommon stocks hitting net new 52-week highs climbing back into the 500 range.
Domestic equity funds witnessed outflows in 2007 totaling $54 billion suggesting that investor sentiment is far from euphoric. Finally, the average gain during year 4 of the presidential election cycle has been 8.9% since 1928.
Meanwhile in 2008, 3.6% is a key level to watch for the 10-year Treasury yield, the commodity bull market moves into its 6th year, and the S&P 500 Energy Sector looks for its fourth sector performance crown in five years – a winning percentage of .800.
1. “1552” The March 2000
peak in the S&P 500 Index
2. “1575-1370” – The 2007 trading range in the S&P 500
3. “500” The number
of stocks hitting net new 52-week highs in a healthy market
4. “-54” Outflows ($billions) from
domestic funds in 2007 (through Nov.)
5. “4 2008 is year 4 of the presidential election cycle
6. “3.6%” A significant
support level for the 10-year Treasury yield
7. “6” 2008 marks the 6th year of the commodity
8. “.800” Energy going for its fourth sector performance crown in five years
Good stuff. Thanks, Andrew . . .
Here’s the video from CNBC.com: click for video Predictions on Target: Calls for 2008, with Barry Ritholtz, Fusion IQ CEO/director of equity research, and CNBC’s Erin Burnett
This morning, I am on CNBC’s Squawk on the Street, at 10;40am.
Today’s appearance is courtesy of our winning forecast in the WSJ 2007 contest, which was described as "eerily close" to the final tally.
As I have said many times, these contests come down to mostly dumb luck, that forecast is folly, and as wildly off as I was in 2006, I was that wildly on in 2007. We do them for fun, and never ever ever make investments based upon them.
With those weasely caveats in place, here are our forecast for 2008:
2007 Close 2008 Mid Year 2008 Final
DJIA: 13265 11,900 12,800
S&P 500: 1468 1275 1350
NASDAQ: 2652 2275 2400
Russell 2000: 766 580 639
10-year yield: 4.03 3.75 4.10
Favorite sectors are Health Care, Consumer Staples (Food & Tobacco), Engineering/Infrastructure, Utilities, Miners (especially Gold). We still like Oil and Agriculture, but the easy money has already been made. We are looking to buy into Technology, but from appreciably lower levels than present.
I will leave you with this slightly randy limerick, courtesy of one curmudgeonly troll:
The forecaster is a gentle man
With neither sword nor pistol
He walks along most daintily
Because his balls are crystal
2007 Forecasts after the jump