Some months back, I made a prediction to friends that the Dow Jones Industrial Average in the stock market would drop from the 14,000 range down to 7000 within one year, and then it would take 5 years for it to close above 10,000 again. I am not a professional investor. I am not giving advice. I'm just saying that based on what I heard on a variety of programs on NPR over the past 3 years, I knew long before all this started happening that we were in for a very rough ride. And now, based on what I'm hearing from the experts I hear on National Public Radio programs, I'm not expecting the economy to really "hit bottom" for another two years. That is to say, I expect things will get worse before they get better -- much worse. In fact, we are already so close to my projection of 7000 that I am considering revising the projection downward to 6000.
We must not be fooled by momentary surges like the one we had today during the last few hours of the trading day. The gains of nearly 500 on the Dow were evidently due to the exuberance caused by the announcement of President-elect Obama's choice for Treasury Secretary. There will be these momentary surges into positive territory, especially as professional traders look for any sign of hope to drive up prices and give them short term profits. But alas, all that improved today is trader confidence, not any economic fundamentals.
Yes, it is
possible that President Obama may do things differently enough and bring in enough very brave and creative people that they will pull off a miracle and we'll see improvement sooner than two years. But a miracle is indeed what I think it would take, so I'm not betting on it. Things are far too messed up to expect they can be fixed in the short term.
What I did last year before things got bad was to pull out of the market almost entirely. What I'm doing now is taking advantage of higher rate savings accounts for now. Pentagon Federal Credit Union, for instance, is offering CDs at 5%; there are others out there if you look for them. I am also researching to plan -- when the time is right to re-enter the market -- which funds or securities would be right for me. But I don't expect the time to be right for at least two more years -- when I believe the market will really bottom out.
And much of my "education" comes from NPR programs I recommend to your listening:
It is your money, your future, your retirement fund. Be well-informed by objective news reporting.
Disclaimer: I am not a professional. I don't know anything. I don't give advice. Do your own homework. You are responsible for your decisions, not me.
