The stock market has been a disaster this year. Something I predicted at the end of January. My prediction was based upon the theory that as January goes, so goes the entire year. It is an old theory that has been recited annually. This past January brought on another batch of magazines and newspapers that retold that theory. Even Eric Tyson, who writes all those Dummies books on finance, disagrees with the theory.
Perhaps the theory won’t be valid for 2010 but it certainly appears to be following the path that January predicted. The S&P 500 graph supports my prediction. Click the graph for an enlargement.
From Morningstar on August 20, 2010: “U.S. stocks declined Friday on light summer trading volumes, sending the Dow Jones Industrial Average to its second consecutive week of losses as concerns about economic growth weighed on investor sentiment.”
From the New York Times on August 21, 2010: “Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.”
Quotation of the day from the New York Times on their emailed Today’s Headlines dated August 22, 2010: “For a lot of ordinary people, the economic recovery does not feel real.” LOREN FOX, an analyst at a New York research firm, describing investors who are pulling out of the stock market at a striking rate.
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