This holiday season, I watched the king of feel-good movies, "It's A Wonderful Life," for the umpteenth hundredth time. In the classic "what if" story, Jimmy Stuart as George Bailey is granted the opportunity to see what life would have been like if he had never existed. Without question, George's family and friends would have been worse off for his absence.
Well, from the fictional Bedford Falls, to actual Wall Street, I had to wonder: What if the early 2011 mainstream financial forecasts never existed? Would those who listened then have been better off -- or worse off -- today?
Cue the angel Clarence Odbody to take us back in time, and...
...What some in the mainstream said in early 2011:
- January 1: "2011 Will Be the Year of the Stock. All of the economic indicators are pointing to stronger growth next year." (SF Chronicle)
- April 27: "US stocks on their way to new highs." (Associated Press)
What we at Elliott Wave International said around the same time:
- May Elliott Wave Financial Forecast: "Stocks should play catch-up [on the downside] in the coming weeks. The next round of headlines should be about the stock market."
What stocks actually did in 2011: From its May 2 peak, the Dow reversed its trend in a gut-wrenching 19% fall before catching its breath in early October.
We don't claim to be always right. But here's what's different about our way of forecasting. Rather than looking at the subjective "fundamental" factors that are supposed to shape market trends (unemployment, interest rates, trade balance, etc.) -- we look at the objective, internal measures of market health: Elliott wave structure, sentiment and momentum.
It may be a new way for you to view the markets. But look at how "the usual" way did in 2011. What about 2012?
Editor's note: Read Part 2 about Crude Oil here.