More than four in 10 respondents to this week’s RBJ Daily Report Snap Poll expect the stock market to rise over the next 12 months.
The stock market’s yearlong rally moved sharply into reverse in the second quarter. The Dow Jones Industrial Average ended the period down some 10 percent, and the Standard & Poor’s 500-stock index had its worst quarterly result since the height of the financial crisis at the end of 2008, losing 12 percent.
The Dow now is roughly 31 percent below its record close of 14,164.53 on Oct. 9, 2007, but up 48 percent from the low of 6,547.05 on March 9, 2009.
Some 44 percent of respondents say the outlook is positive, with 15 percent predicting a double-digit rise and 29 percent expecting a single-digit rise. Thirty percent say the market will be flat over the next 12 months. Twenty-five percent forecast a market decline.
When asked the same question late last August, after the major U.S. stock indexes rose to new highs for the year, more than two-thirds of poll respondents predicted that stocks would rise over the next 12 months, with 46 percent putting their money on a single-digit gain. At midweek, the Dow was up 2.7 percent from the close on Aug. 28.
Roughly half of readers today say stocks are still the best long-term investment. Eighteen percent think buying real estate is the best bet over the long haul.
Roughly 340 readers participated in this week’s poll, which was conducted July 6.
Where is the stock market headed over the next 12 months?
Double-digit rise Single-digit rise Basically flat
15% 29% 30%
Single-digit decline Double-digit decline
In your view, what today is the best long-term investment (10 years or more)?
Stocks Real estate Gold Bonds Other commodities Other
49% 18% 15% 8% 6% 4%
The fact that cash was not included as a category for best long-term investment shows the overwhelming bias in favor of equities and other traditional categories of investments. If you just put your money in a box in 1875, you would be way ahead of any investment class in 1910. This may well be the same situation where extreme inflation following on the conclusion of a protracted war (the Cold War) is wrung out of the economy, drop by painful drop.
-John Perry Smith, Total Information Inc.
It is hard to read the tea leaves, but what "O" is doing is leading us out of capitalism. This means the end of the market I have known for the last 50 years.
OK, so I’m no pro investor, but it seems to me that stocks are still the best bet for long-term growth. Bonds (and especially municipal bonds) are in trouble because the governmental financial base is tapped out. There are more communities going broke than ever before, and their bondholders are suffering as a result. Gold? Don’t forget that an investment in gold gives inverse rewards to what the economy does. If the economy goes down, gold goes up, and vice versa. Do you really want to keep betting on the economy failing? I think the economy will remain essentially flat or possibly decline a bit more until we see a restructuring of debt, jobs and local and state governmental budgets, including having the public employees unions recognize that they are a big part of the problem. There are so many of them on that "Island of Greed" that it’s sinking. Oh, and the one palm tree is already dead. No more shade.
The emperor has no clothes! People are figuring this out. Money and stock market values are not real. Real value does not come out of thin air or computerized trading. Our financial system is built on deception and illusion. Pay off your debts, become more self-sufficient, learn about and contribute to our local economy.
Project HOUSE/Green Irene
I think that the biggest increase has happened since 2008 but that the economy will recover further. Unfortunately, employment will drag because of outsourcing and because investment in research and development will further decline here. These will cause a continuous drag on the economy. Nevertheless, I am anticipating slow growth.
-Ingo H. Leubner,
Until the Obama administration changes its Keynesian economic solution to fix the economy, the job and stock markets will remain sluggish.
-John Rynne, president, Rynne, Murphy & Associates Inc.
For more comments, go to rbjdaily.com. To participate in the weekly RBJ Snap Poll, sign up for the Daily Report at rbjdaily.com/dailyform.htm.