According to Hulbert, history suggests that stocks will be up in 2009.....or down. He says "Try as I might to find year-to-year patterns in the data, I came up empty: Whether or not the Dow gains or loses in a given year has little to do with whether it gained or lost in the previous year.
In other words, the stock market sometimes does bounce back after having a bad year. But on other occasions it continues to go down.
Consider 1908 -- the year after the Dow lost 37.7% -- when it gained 46.6%.
But before you get too excited, consider how the Dow did in 1932, the year following its 53.7% loss in 1931. In 1932, the Dow lost an additional 23.1%."
So there you have it, my prediction for 2009 - stocks will either be up......or down.
Please don't think I'm being flippant, this has been my prediction for at least the last eight years. Those who claim to know where the market is going are fools, if anything 2008 has proved this to be true. There is one true test of an economic forecaster - his/her balance sheet - if they can't produce one that shows they are multi-billionaire's they don't know what the market will do. If you knew what the market was going to do and had confidence in that prediction you would be enormously rich very quickly - I've come across zero economists (even the Doomsayers of the last 18 months) who have an enormous balance sheet - thus my conclusion is that the markets cannot be predicted with any accuracy.
Scott Dauenhauer CFP, MSFP, AIF