How many of you 4ECon readin' sons of bitches remember this post I did a long time ago in August of 2007, about my prediction of where the stock market was headed?
To refresh your memories, here's the graph I used:
That black, drawn-in brace on the right side of the graph was my prediction of where the S&P 500 would end up sometime over the subsequent two years.
And here's my favorite line from that post, referring to my prediction of when "serious panic" will hit the stock market:
"When? My guess: ANY TIME between now and October 2009. Mark my effin' words. When stocks do drop, it'll be down to the long term trend line. When that happens, make sure you're buying stocks - unless, of course, there's a much better reason not to (such as the rise of the machines, Terminator style...)"
...So, um... Who's awesome now, huh? That's right.
Here's today's graph of the S&P:
Look at that decline over just the past 15 months! Shizz!
So how well did I do? I was right about the time (but really, how hard was that to predict in August of 2007, especially with a two year window?) But I was overly optimistic about the extent of the decline.
And now here's today's graph of the S&P beautifully overlaid on the 15-month-ago graph, in case you're curious how close my prediction was:
For sheit's sake! It's like I drew that black brace from the old graph just recently, isn't it? I knew it, I'm some sort of stock predicting sorcerer! Perhaps I shall purchase a magical staff...
But wait... We kinda overshot the hell out of that trend line on the way down, didn't we?
Damn, that's quite an overshot.
All right, so I may have been overly optimistic about the lower boundaries of stock droptitude, but that means one good thing for you followers of Foreeconomical Canon:
The line from my August '07 quote, "When that happens, make sure you're buying stocks," is even more important to pay attention to now.
No, I'm not saying that you definitely will not get completely screwed in the short term (only on paper, mind you) if you buy stocks now. Who knows, there might be, as I said, a Rise of The Machines type of craptastic event that occurs in the near future. Machines grown from credit crises that force you to pay back your home loans with lasers. I'm not saying this won't happen. Mark those words. I didn't say it won't. There's my new prediction. Heeeed!
What I am saying, though, is that you will definitely not get completely screwed in the long term if you buy pretty much any stock [index fund] now. I usually avoid saying this line, because I grew so sick of people saying it over the past 3 years, but it's a reasonably good time to buy.
Relative to the past couple years, that is.
As of this posting, the Dow's at 7,997.28. Sure, you might get a better chance to buy stocks at better prices over the next year or so, but who can see that coming? I mean, besides a sorcerer with a magic staff... ...Which I will be the minute I find one on eBay...
Now if you actually are considering taking my advice, follow these rules:
1) Don't put all your money in at once. Split your investment into as many reasonably-size chunks as possible and dollar-cost average over the next year or two.
2) Don't buy a bunch of useless crap. Actually, here - here's the best advice of all: Buy a whole ton of the S&P Index tracker, (stock ticker: SPY - $81.50/share right now) in chunks over the next year or so and hold it for 10-15 years. You'll do fine.
But which of the one reader of my blog is actually going to follow this advice anyway? My real purpose here is just to say this crap on the internet so I can write another blog post in two years talking about how right I was way back in November of 2008.
...
But again, I apologize. This is just my Krug Disease acting up.
Yes, it's a real disease! Just Google it.
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