S&P-500 Target: ZERO on 11/1/09
The above chart is clear and succinct. If the current trend continues, the S&P-500 will trade at ZERO on November 1, 2009.
Rocky calculates that a disciplined investor who put $100 into the Vanguard S&P-500 fund every month for the past twenty years, now has a negative return on his entire investment (including dividends). This is a stark measure of the severity of this bear market, and it obviously shakes the confidence of many folks who responsibly “dollar-cost-average.”
Rocky (who believes in long-term-reversion-to-the-mean) finds this information to be bullish for the next 10 to 20 years. Folks who extrapolate perpetual losses today are repeating the same mistake as folks who extrapolated 15% annual compounded gains in the 1990’s.
Rocky continues to contently nibble at stocks. If the stock market reaches zero on November 1st, Rocky will happily own 100% of the US stock market. Noone knows whether the S&P will actually reach zero — but if it does, Rocky will savor firing the irresponsible CEO’s — who like Slim Pickens in Dr. Strangelove rode their companies into oblivion. (As Major Kong’s navigator says, “The Target is in sight.”)