The stock market is typically 5 or 6 months ahead of the economy. That is what we are led to believe; actually many bear market rallies are predicated on this theory. Does it really?
We heard the declared bottom ring in November 2008 when the Dow Industrial Average hit 7552. So according to the Stock Market fortune teller the Dow Industrial Average should not have broken the 7552 level in February and economy should be on the rise by now. Unfortunately this prediction has been proved wrong this time.
One thing is for sure; eventually it will be right (assuming you believe the World’s economies will recover at one point, I do). One of the eventual lows will be preceded by growth.
Sounds kind of like a convenient statistic, where they fail to disclose the accuracy. Over the past year, how many times have you heard “bottom”, how many times has this fortune telling ability been right?
Lately the fortune telling ability of the stock market has been the reason “you can’t afford not to be in this market” according to the mass populous on Wall Street. It may eventually be true, but can you afford its accuracy?
