2009 Outlooks

Street looks to '09 with relief after terrible '08
By the year's end, many market analysts were predicting that 2009 would be better, but that recovery would be slow as investors, shaken by the devastation to their portfolios, U.S. companies and the overall economy, remain reluctant to buy.

2009: Expecting a Massive Rally
I think we are setting up for a massive rally - much more than the 20% rallies we have had. The quicker a massive rally were to occur, the more likely I would expect it to turn out to be a bear market rally and I would look to add an inverse ETF as a hedge if the rally was very fast. 30% in a couple of months would be a scenario that I would fade. If the market rallied 30% over 12-15 months, I’d be less likely to fade that one - but that is a long time off.

In case it is not clear a massive rally is just that, a bear market rally which I think is more probable than a new bull. In 1935 and 1936 the Dow had a two year 72% rally.
The Fed didn't do anything between 1929 and 1933, and the market managed to pull together 5 sucker rallies 20% or more before finally hitting the bottom.These 5 sucker rallies were:
11/13/1929 - 04/17/1930, 198.69 -> 294.07, 48%
12/29/1930 - 02/24/1931, 160.16 -> 194.36, 21%
06/02/1931 - 07/03/1931, 121.17 -> 155.26, 28%
10/05/1931 - 11/09/1931, 86.48 -> 116.79, 35%
01/05/1932 - 03/08/1932, 71.24 -> 88.78, 25%

1. Only one lasted as long as 5 months. Most were 1 or 2 months long. So they were not "massive" in any sense of being sustained.
2. The fact that they were bear-market, or sucker, rallies is evident from the overall movement from the beginning of the first to the end of the last: 198.69 --> 88.78, which is negative 56%.


8 really, really scary predictions
Jim Rogers
The U.S. market is yielding 3% today. For stocks to go to a 6% yield without big dividend increases, the Dow will need to go below 4000. I'm not saying it will fall that far, but it could very well happen.

Nouriel Roubini
We are in the middle of a very severe recession that's going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it.

Gross: Treasurys Enter Bubble Territory
Bill Gross: Investment Outlook : Dow 5,000 Redux
Dow 5,000? We don’t have to go there if current domestic and global policies are focused on asset price support and eventual recapitalization of lending institutions. But 14,000 is a stretch as well.

'Fast Money' Recap: Gloomy '09 Outlook
Joe Terranova said he hopes 2009 turns out to be a replay of 1988, when the market slowly recovered and ended up 12%. He said he doesn't want a replay of the period between December 1931 and June 1932 when the market dropped another 46% and ended down 32% for 1932.
Lee commented briefly on the VIX, which fell to 39 today. Tatro said it's easy for investors to get complacent and believe the market can't go lower. "That's ridiculous. We could go down another 30% to 35% in 2009," he said.

5 stock experts foresee 2009 rebound

2009: Potential Surprises and Other Predictions

1. Stock markets will plunge to new lows - I develop forecasts to predict fair value of the S&P 500. The fair value estimate serves as a price point at which I am being fairly compensated for assuming market risk. I start 2009 with a fair value target on the S&P 500 of 625. This equates to approximately 6,000 for the Dow and 1,050 for the NASDAQ.
2. Unemployment exceeds 10%
3. The mass retail culture dies -- As unemployment rises, consumer spending will drop and mass retail outlets will diminish.
4. Treasuries are the next bubble to burst - The Fed has indicated they will do whatever is needed to reflate the economy. Eventually the printing presses will run so hard that investors shun the low yields of Treasuries and inflation returns.
5. Trending markets allow active traders to outperform - As markets skid to new lows, trading opportunities exist. A second half rebound based on positive growth in 2010 offers potential for gains. Those who position within these trends will do well. Those who buy and hold will not.