How am I doing - Parte Tres

Okay, time for another snap quiz. Originally, I predicted that the US stock market would come out of its tailspin in mid-Q1 2009. I later amended that to the end of the first quarter. In mid-March the major indices started to reflect a significant rally, which went into full rocket mode on Monday, March 23.

So it looks like I had the trend but I was off by a few weeks. Now I'll put another marker out there and you can come back later and laugh at me.

The markets will slowly improve over the next few weeks, into late April or early May. Then there will be a major pull back that will last until mid-summer. Then in late July or early August, the real market recovery will begin.

Why do I think this? Well, historical trends would predict this but looking backwards, historic trends are driven by actual facts on the ground. In this case, the federal government has finally finished creating the structure under which the maladies caused by the collapse of the housing market bubble. The public-private plan will begin to remove the toxic assets from the banking system which will rebuild the foundation of the system.

All of this will take time, a long amount of time. I have told friends that this downturn will last a relatively short amount of time - say until early 2010 - but the emotional effects will last a generation. It will take five to ten years before the average person will trust public markets. It is likely that my children will not be comfortable in the markets for a long, long time.

Some other time, I may wax philisophic on what an historic opportunity this moment in time is for investors - smart investors. But that is a useless digression within this post.

For the moment, my adjusted prediction is coming true. Let's see how the rest goes.