Mark D. Goldstein, CFP®
Certified Financial Planner
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They’re starting again. The pundits who make bold proclamations about where the market is heading. Unfortunately, their track records leave much to be desired… and following their advice can be hazardous to your wealth!
Just a few examples…
In 1987, Elaine Garzarelli, then an analyst at Shearson Lehman, correctly predicted the year's infamous stock market crash. She became an instant sensation and her opinion was in high demand.
But on October 19, 2007, one week after the S&P 500 hit its all-time high, she appeared on CNBC saying she was extremely bullish. Immediately, the market went straight down, sliding nearly 60%!
Art Hogan, former Managing Director of Jefferies, called a market bottom on October 10, 2008. Not quite. The market continued to fall another 25%.
In 1999, James Glassman and Kevin Hassett wrote a best-selling book titled “Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market.”
You have to admit, calling for the Dow to surge to 36,000 in 1999 was quite a gutsy proclamation. It just didn't work out so well. The S&P dropped 46% over the next three consecutive down years. The Nasdaq lost a whopping (gulp) 78%!
The legendary Joe Granville has had some luck spotting bear markets. After all, he nailed the 1977 downturn. And in March of 2008, he predicted the Dow would end at 9,000… 27% below where it stood at the time. Again, he was right, as the Dow finished the year at 8,776.
But he also called many bear markets that never happened. One of those calls was his January 1981 plea to "Sell everything!”
Not such a good idea, as it turned out, since that was the beginning of a record-breaking 18-year bull run!
Granville proclaimed his bearish stance again in 1995... smack dab in the middle of "The Mother-of-All Raging Bulls!"
In August of 2011, Mark Arbeter, Chief Technical Strategist of Standard & Poor's, said, "We believe we are seeing pretty clear signs that the 2009 to 2011 bull market is over and that the bear is just starting to get its claws into the market."
Of course, the market has surged relentlessly since then.
At the same time, Peter Boockvar, Equity Strategist at Miller Tabak & Co., said, "This is the end of the run."
And we can't forget New York Times economist and Nobel Prize winner, Paul Krugman, who won FIRST PLACE in the Donald Trump "Fake News Awards" for proclaiming... on the day of Trump's victory... that the stock market would crash and America's economy would never recover!
Not a joke. Google it.
They are not psychic. I don’t mean to pick on these people. Well, actually I do mean to pick on them... while pointing out the fact that market timing is impossible. There has never been proof that anyone can do it consistently, despite so many boasts to the contrary.
Whether you think stocks are too expensive or too cheap, you may or may not be right. But if you're wrong (and chances are you will be), you're going to get burned.
So if you have a crystal ball, use it to predict something useful… like who’s going to win the Super Bowl.