Is Dow 6,000 Possible?

January 20, 2008

I guess the answer to that question would be “In what year?” Certianly not in 2008 if you ask stock market hyper guru Abby Joseph Cohen, the superbull at Goldman Sachs, who maintains that the Dow will finish 2008 at a level 22 percent higher or 14,755. You do know that she makes money by people buying stock don’t you?

Back in the real world, the stock market ended on Friday with the Dow Jones industrial average falling 59.91 points, to 12,099.30. That modest decline capped a four-day 678-point plunge that left Wall Street traders and everyday investors wondering if the worst was over.

Abby would of course say YES!

Ah, but there are other voices. David W. Tice, a renowned bear, said Friday that the Dow would sink to 6,000 by the end of the year as the country slides into a recession. Now we’re not talking about a small difference here. While their views diverge, both strategists agreed on one point: The wild ride is far from over.

Be prepared for sleepless nights if you decide to invest in this crazy market. Or, you could just buy some gold coins and go about your business, while sleeping well at night. In whiplash trading, the Dow has fallen 14 percent from its peak in October. While the market has taken deeper dives in the past — it plummeted 37.8 percent from January 2000 to October 2002, for example — volatility is approaching its highest levels in several years.

“The R-word is really scaring investors,” said Leon Rousso, a certified financial planner in Ventura, Calif. “I’ve been holding hands and comforting people to get through this and not to panic at a possible recession.” Yet some analysts warn the news could get much uglier. Earnings forecasts have gone down quite dramatically this year!

“What could cause greater economic losses or fallout in the market would be further recognized losses or downgrades in the financial sector,” said Joe Davis, an economist at the mutual fund company Vanguard Group. “That is the heart of the problem and where the greatest risks lie.”

America is also at risk of losing it’s Triple A credit rating!

Indeed, while many of the world’s largest financial institutions, including Citigroup, Mejrrill Lynch and UBS, have written down billions of dollars worth of securities linked to mortgages in recent weeks, some investors remain concerned that losses could grow if default levels continue to climb not only on mortgages, but also on credit card bills and auto loans. And, making matters worse, there is mounting concern about the ability of companies that sell insurance for bonds, including MBIA and Ambac, to survive.

One would almost have to automatically say that ANYTHING is POSSIBLE with the environment that currently exists world-wide. Whereas in times past America could largely dictate what happened internationally, those days are over.

Is 6,000 possible? Absolutely! Is it probable? Doubtful!

Written by Ernie · Filed Under Daily Commentary

Comments

2 Responses to “Is Dow 6,000 Possible?”

$1,000 Gold Tomorrow? on March 3rd, 2008 10:57 am

[...] And how LOW can the DOW go? [...]
$1,000 An Ounce Gold! on March 13th, 2008 9:06 am

[...] A 6,000 Dow is still not entirely out of the picture. Sounds crazy, but! [...]

Got something to say?