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Stock Market Predictions From a Broken Record

For investors, happy days have been here so long that it’s beginning to seem surreal. The United States stock market is at all-time highs; we have low unemployment rates and solid company profits. The big question is, “What will happen in the near future?”

It’s a question that no reporter has asked me for years. The reason is simple. When it comes to predictions for the US stock market, I am a boring, broken record. There is nothing exciting, stupendous, or scintillating in my predictions. They are always the same.

If a reporter did interview me, here’s how the conversation might go:

Q: What are your predictions for the US stock market this year?

A: If there are more buyers than sellers it will go up. If there are more sellers than buyers, it will go down.

Q: With the market so high, is this the time to take profits and exit the market?

A: If we knew the market is heading down next week, yes. But we don’t have any idea when the market will reverse and go into a bear market.

Q: When do you think the next market crash will happen?

A: It will happen, I can guarantee it.

Q: But when?

A: When there are more sellers than buyers.

Q: But the market is overvalued. Shouldn’t savvy investors get out now?

A: The market could just continue to get more overvalued as it did in the late 1990’s. And unfortunately, a lot of not-so-savvy investors have gotten out of the market over the past two years while the market has gone higher and higher.

Q: So when the market declines, how far will it decline?

A: Probably 20% to 44%.

Q: Can you be more specific?

A: No. A bear market is a decline of 20%, and about the worst annual decline is 44%.

Q: Is citing market averages all you can do?

A: Yes.

Q: When the stock market enters a bear market, how long will it last?

A: Probably about 18 months.

Q: Another average?

A: Yes.

Q: You don’t seem very sure of yourself.

A: You are right. I actually don’t have a clue where the market is going tomorrow, next week, next month, or next year.

Q: Can you give us a list of your winning stock picks?

A: Sure. It’s just as long as my list of losing stock picks.

Q: Well, certainly you try to beat the market for your clients, right?

A: No, I just try to do the same as the market.

Q: That sounds incredibly unattractive.

A: Are you kidding me? Since 97% of investment gurus do worse than the market, all I try to do is equal the market.

Q: All the great stock pickers say they are contrarians who never follow the herd. Are you a contrarian?

A: Yes, I think you could call me a contrarian. I am about as contrarian from the average market forecasting guru as you can get. I put people to sleep with my market forecasting.

Q: Thank you for your time. I hope you don’t mind if I never call you again.

A: No problem. Just save your notes from this interview. They’ll be as valid next year and the year after as they are today.

Eventually, we will see a broader bear market with most stocks losing value. Exactly when, though, is impossible to predict. The important thing to remember is that few people have ever become wealthy by jumping out when they think the downturn is coming. Many, however, have gotten wealthier by holding on through lows as well as highs.

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