Friday, October 10, 2008

How Far will the NYSE Drop?

To 6,900 points (6500 - 7000 range). I'm going out on a limb, I know. Call it overly-simple technical analysis or just the law of averages, but if you draw a straight line over the very long term of Dow Jones returns (starting from the 1930s), the expected return for the stock market today should be around 6,970. That also means that all things being equal, the Dow should be at 7,318 on October 10, 2011. That's a little under 2% growth annually. Granted, that's not likely to happen, but if you think it might, then you're better off opening an E-Trade checking account and letting your interest growth with FDIC insurance.

A special shout-out to my sister Angela, who's really smart but thinks math is boring: you can predict the future with math! The equation I used above is a regression, here's the equation it gives you: y=.3185x-5682.85. x=the day you want to predict what the stock return will be (I think 1=1/1/1900, today is 39733).

Then again, if you start the line at June 29, 1959, then the market should drop no lower than 8,451, so you never really know...

1 comment:

Brian said...

Think we might need to start a pool :-D