How do you know if you can trust someone? You never really do. It does
however help to have a track record of someone’s integrity and
reliability. Fool me once, shame on you. Fool me twice, shame on me.
Investors are up to their necks with various predictions – some better
than others. Many are simply changing as the market does. Higher prices
typically results in yet higher predictions and lower prices result in yet
lower forecast – a classic example of crowd following.
On March 9th, 2009, The Wall Street Journal made a case for the Dow
dropping to 5,000. At that time, the major indexes had already been
tumbling for 18-months and the DJIA broke below 7,000.
At exactly that time, Goldman Sachs projected that corporate earnings for
the S&P 500 would fall to $40 a share. Previous estimates were revised
from $113 to $64 before arriving at $40.
In a March 19th, 2009, Investor’s Business Daily featured a few of Simon
Maierhofer’s predictions in their popular Q&A section. Here’s an excerpt:
IBD: Simon says and the market, so far, is playing along. Simon
Maierhofer, co-founder of ETFguide.com, accurately forecasted in his ETF
Profit Strategy Newsletter that the Dow would top at 9,000 in January and
hit a bottom between 6,000 and 6,700 in March. Where do you see the market
headed now?
Simon Maierhofer: Over the next few months, investors will get a chance to
unload equities at prices they would have signed off on a few months ago.
Beyond Q3 of 2009, however, it becomes clear that this bear market is far
from over.
Via the ETF Profit Strategy Newsletter, Dow 9,000 – 10,000 was given as a
target range for this rally. Even though the rally has carried on longer
than expected, the decline from the January 2010 highs has quickly erased
three months of gains. What’s next?
According to Bloomberg, ten major Wall Street firms project an average
9.8% gain in 2010 for the S&P 500.
On January 15th, 2010, two trading days before the U.S. stock indexes
peaked, the ETF Profit Strategy Newsletter warned of the following:
“Bullish sentiment has reached a level where it is suffocating nearly all
bearish currents and undertones. The natural reaction would be, and has
been by most, to conform to the trend, join the crowded trade and turn
bullish. Historically, such extreme optimism leads to market declines.
Even though the up-trend has lasted longer than expected, we believe that
every day that brings higher prices presents a better opportunity for the
bears. In the following pages we will explain why stocks are at the cusp
of a decline and how today may differ from historic patterns.”
The February issue of the ETF Profit Strategy Newsletter includes detailed
forecasts for all major asset classes (stocks, bonds, gold, silver and
U.S. dollar) and 7 bold predictions. None of the predictions are on Wall
Street’s radar screen.
But then again, Wall Street didn’t see the post-2007 decline and 2009
rally coming. Sometimes it helps to think outside the box. In fact,
sometimes it might be the only way to survive and thrive.
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