Thursday, February 12, 2009
A survey: How low will the Dow go?
Four months ago we asked people to predict the bottom of the Dow Jones Industrial Average and the month in which it would make its low. Your predictions are in the comments. Some have been superceded, some are very much still in play. I predicted that the DJIA would bottom at 6800 in March of 2009, discounting a recovery by about six months.
Well, let's do it again. I am going to stick with my prediction from October, which I still like. What do you guys think? Name the low for the DJIA and the month in which that low will occur. If we have already hit the low, say so.
BONUS question: What industry will prove to be the best to have purchased now? My answer: Integrated oil.
18 Comments:
By 
, at
Thu Feb 12, 11:16:00 AM:
A partial guess: when the 1Q 2009 company reports come out in April, the numbers will mostly be worse than the 4Q 2008 numbers were,
and the DJIA will get down to near, or below, 7000.
By , at
Thu Feb 12, 12:14:00 PM:
"Superceded" is actually, "superseded."
By , at
Thu Feb 12, 12:19:00 PM:
I sure am glad I was not foolish enough to hazard a guess four months ago. I humbly bow before the power of Anonymous--Fri, Oct 10
By , at
Thu Feb 12, 12:24:00 PM:
By 
Georg Felis, at
Thu Feb 12, 12:38:00 PM:
Bonus Answer: Remmington ammunition (note the shortages presently) and Canned Goods (most probably Aldi's)
By , at
Thu Feb 12, 12:45:00 PM:
I have no idea how low the DJIA will go, but I would just say I don't think we have seen the bottom.
What I would say is to buy Barrick or Newmont. Gold mining companies.
-David
By , at
Thu Feb 12, 01:56:00 PM:
Your prognostications are generally pretty good, TH. I hope you are right. An irrelevant observation: In 1989 the Nikkei was near 39000? In 2009 it is what, maybe 7700? I am told our biggest banks are insolvent and that Europe's banks are teetering on the brink. Obama wants more regulations and taxes on American business, Cap & Trade is still a possibility and we mustn't forget card check. I fear we will go much lower than 6800 if Obama and the dems have their way. Re Bonus Question: I concur that integrated oil would be a good choice.
By Muddy Waters, at
Thu Feb 12, 01:58:00 PM:
6750 November 2009. Purchase now WFT or OXY
By Viking Kaj, at
Thu Feb 12, 02:04:00 PM:
The bigger question is how low the dollar will go...
By TigerHawk, at
Thu Feb 12, 02:16:00 PM:
Viking Kaj - Against what currency? As tough as we are being on the dollar, it is not clear that Europe is such a great place to invest.
By Muddy Waters, at
Thu Feb 12, 02:18:00 PM:
Call the price of gold?
My guess $1400
By MartyH, at
Thu Feb 12, 02:18:00 PM:
My guess is that we will see a series of lower lows as Congress continues to do the wrong thing at the wrong time and muck things up. If we begin to recover taxes will be raised, strangling the recovery in the crib. If we don't begin to recover, there will be a second, bigger stimulus bill passed. The short term bottom will be around 6000 in mid 2010. It will go lower if Pelosi is still in charge of Congress in 2011. (Democratic or Republican)
By , at
Thu Feb 12, 02:21:00 PM:
It might be fun to have a Tigerhawk blog virtual stock market game. There are some good simulators out there. We could all see who knows what.
By Diane Wilson, at
Thu Feb 12, 04:15:00 PM:
It will go lower if Pelosi is still in charge of Congress in 2011. (Democratic or Republican)
MartyH, are you suggesting that Nancy Pelosi could still be in charge of Congress in 2011.... as a Republican?
By MartyH, at
Thu Feb 12, 04:25:00 PM:
Diane-
No, I'm suggesting the Pelosi may face a leadership challenge. The Republican brand may be damaged too badly to gain a majority, but Pelosi's unilateral liberalism may be discredited as well. Perhaps enough blue dog Democrats get elected on the promise of true bipartisanship to force Pelosi out of her leadeship post.
By , at
Thu Feb 12, 04:35:00 PM:
After Obama won the Democratic party primary I predicted that if Obama were elected and if he governed in accordance with his campaign rhetoric the DJIA would be at 4500+-300 by 2010, in constant dollars. This was in mid 2008, when the Dow was hovering around 11,000. All my friends though I was crazy.
I'm sticking with my prediction. Corporate revenue growth is going to stink in 2009. Declining asset values are going to require significant increases to pension plans, further eroding profits. The private sector is going to groan for several years.
Public pension plans are grossly underfunded too--many are as much as 50% underfunded. The only way for our political class to make good on their dollar-denominated promises is to devalue the dollar. Inflation is on the way. The DJIA may remain at 8,000 in nominal dollars, but three three years of 20% inflation reduces that 8000 to 4629 in constant dollars.
Americans are getting the change they deserve for electing Obama. My advice: buy gold and silver.
By Who Struck John, at
Thu Feb 12, 09:00:00 PM:
No changes here. The Alt-A and Option ARM mess is still out there waiting to reset in 2010 and 2011, and the Eurozone has huge emerging market loans that are marked to myth.
That the Congress and the administration will be out there actively making things worse is just a bonus.
By , at
Fri Feb 13, 12:42:00 AM:
I posted 6,000 the last time around, but with Pelosi and the stumbling of Obama, now some banks that are dead meat....damn gold should go to 1200 in 2 months.
