As a  long time market observer, one of the questions I am most frequently asked is: what do I think the stock market will do next?  This question makes me wince.  Why?  Almost any answer I give is fruitless. I could give a very accurate answer, which is what J.P. Morgan did when he was repeatedly asked the same question many years ago.  He said, “Prices will fluctuate.” I could be a little more specific and say, “On average, if history is any guide, prices will rise 20 out of the next 39 days and fall 19 of those days. The particular sequence is unpredictable and unknowable.” Or I could be ultra-specific and say, “The S&P 500 will rise by 4.2% in the next three months.” But why should anyone believe an answer as precise as that?  Such predictions are no more than guesses, and even if you gathered a bunch of them from every market pundit, you would simply be taking a sample of the consensus, which may or may not turn out to be true. We know that such forecasts are about as accurate as rolling dice, so why even ask? Read the rest of this entry »