Yesterday I made a few predictions about what state the economy would be in by the end of the year. Specifically, I predicted the Dow would end the year around 11,000 due to the bailout propping up the market.
Well, it didn’t take long for that prediction to start looking stupid. Despite the bailout package finally passing on Friday, the Dow plummeted almost 400 points to 9,955. This only goes to show the futility of making short-term market predictions. It makes perfect sense the market would rise on news of the bailout passing but it actually did the opposite. Why? I have no idea and I doubt anybody else does either. Sure there’s a lot of bad news out there, but as far as I can tell, there’s no more today than last week.
So will the Dow recover by the end of the year? I think I’ve already shown that your guess is as good as mine. If you are investing for the long term and have a prudent asset allocation, you should be fine.
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