Readers optimistic about growth in stock market
More than half say stocks are best 10-year investment
Readers are optimistic about the stock market’s prospects over the next year.
A plurality of respondents to this week’s RBJ Daily Report Snap Poll expects a single-digit rise for the stock market over the next year. Some 21 percent expect a double-digit rise, while 17 percent predict that the market will stay basically flat. Only 16 percent of readers think the market will decline over the coming 12 months.
Last Friday’s rally, sparked by a jump in home sales and Federal Reserve Chairman Ben Bernanke’s statement that the economy is poised for growth, sent the major U.S. stock indexes to new highs for the year.
As of Aug. 21, the Dow Jones Industrial Average had risen 45 percent since hitting a bottom on March 9 and the S&P 500 had gained 52 percent. Both indexes, however, remained 33 percent lower than their all-time highs of early October 2007.
Some market analysts think a rebounding economy will fuel further stock gains from the 12-year lows set in March, but others predict a pullback, pointing to still-rising unemployment and weak consumer spending.
More than half of Snap Poll respondents say stocks remain the best long-term investment, followed by real estate with 19 percent.
Roughly 380 readers participated in this week’s poll, which was conducted Aug. 24 and 25.
Where is the stock market headed over the next 12 months?
Double-digit rise: 21%
Single-digit rise: 46%
Basically flat: 17%
Single-digit decline: 9%
Double-digit decline: 7%
In your view, what today is the best long-term investment (10 years or more)?
Real estate: 19%
Other commodities: 4%
The long-term effects of the massive borrowing scheme perpetrated by Congress are difficult to predict, but only in their timing. The effects themselves are virtually guaranteed-rapid rise of interest rates, inflation and the devaluation of the dollar-and this will all have a tremendous effect on the stock market. Exactly when we will reap what has been sewn is much more difficult to predict. Unfortunately it may take place just as Barack Obama leaves office, and blame will be misplaced on whoever is coming into power at that time. Unless, of course, it’s another Democrat, in which case George W. Bush will somehow be to blame yet again. -Todd VanHouten
What Reagan and Bush learned about fighting a recession was to put the money back in the hands of the people. That’s why the tax cut promised by Barack Obama was so inviting for so many. The market is the best way to assign opportunity and wealth. Federal spending on non-urgent pet political projects is inflationary in the long run. The private sector, which creates "real jobs" that pay for themselves, will soon have to compete with the federal government for credit, driving up the cost of money and stifling the private sector’s efforts to grow and create jobs. It will be interesting how future generations will treat Obama, Pelosi, Reid, Frank and Dodd when they have to pay for all our bridges to nowhere, our health care and our new cars. -Clifford Jacobson, WebHomeUSA.com
An increase in home sales is no surprise: The $8,000 first-time homebuyer credit disappears on Dec. 1, and people are trying to take advantage of it. But will it really help pay for a home? Not $8,000 worth. Instead, the credit creates competition that holds up housing values, preventing them from fully deflating to natural market levels. Once the credit disappears, expect house sales to lower until prices drop a few thousand more. Similarly, the CARS (aka Cash for Clunkers) program is propping up car sales and thus the economy via all the jobs that the automotive industry supports. Once the government credit disappears, expect car sales to slow down, as well. Sadly, this program not only disregards but in fact hurts the poorest among us: Those limited to buying a clunker instead of a decent used car are still unable to afford a new vehicle with the allowance, and the reduced availability of used cars will drive up used-car prices. -Perette Barella, DeviousFish.com
The movements of the stock market are irrational. There will always be a fluctuation between increase and decrease (due to profit taking, panic). Overall, President Obama’s financial and economic plans and activities have for the time being essentially stopped the free fall. Thus, for the longer term (next two to three years), the market should grow. Returns to boom levels are dubious. On a personal level, stocks that tanked will be gone forever. I cannot hope to make up for those losses. Thus, a buffer of safer investments is essential for the normal consumer. However, bonds also have tanked. Even the mattress is not safe. -Ingo H. Leubner
The stock market will not permanently increase and gain until the unemployment rate decreases. Good-paying jobs are the key to improved economy. Stimulus is good, but what happens when it’s over? -Ed Schlueter, president, Medgraph Inc.
Strong advances in the U.S. stock market are unlikely until the unpredictable one-party stranglehold in Washington is broken. -Tom Shea, Thomas P. Shea Agency Inc.
08/28/09 (C) Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303.