"Goodbye 08" by WCM 01/01/09 Part 1 |
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As we all get older we complain about how fast time goes by. Life seems to pass by in a blink. However, it sure is nice to pull the curtain on the 2008 stock market. We saw the worst performing stock market since the early 1930’s, and I’m not sure anyone expected to see this year pan out like it did. An article in the USA Today from January 2, 2008 had the “pros” make their stock market predictions for 2008. For reference, the S&P 500 started 2008 at 1468.
Abhijit Chakrabortti of Morgan Stanley: 1520
Abby Joseph Cohen of Goldman Sachs: 1675
Tobias Levkovich of Citigroup: 1675
Tom McManus of Bank of
Thomas Lee of JP Morgan: 1590
Richard Bernstein of Merrill Lynch: 1525
The S&P 500 closed the year at 903. Quotes of the Year: "A very powerful and durable rally is in the works. But it may need another couple of days to lift off." -- Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
“AIG could have huge gains in the second quarter." -- Bijan Moazami, analyst, Friedman, "I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They're not in danger of going under. I think they are in good shape going forward." -- Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008 "No! No! No! Bear Stearns is not in trouble." -- Jim Cramer, CNBC commentator, Mar. 11, 2008. Five days later, JPMorgan Chase took over Bear Stearns with government help, nearly wiping out shareholders. "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." -- Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008 “Stop waiting and buy the next dip because I think it might be the last big one.” -- Jim Cramer calling the market bottom on July 15, 2008. The market declined another 37% over the following four months.
“In today's regulatory environment, it's virtually impossible to violate rules." -- Bernard Madoff, money manager, Oct. 20, 2007 Enough of the past. The above shows that assumptions, predictions, and guesses should never take the place of objective based, goal-oriented and risk-adjusted portfolio allocation. |
