The last business day of the old year brought two items, and two items only, to my mailbox: a bill and an IRS booklet complete with instructions and forms for filing my 2006 tax return. But, my portfolio signed off on 2006 with a lovely shade of green. So, the old year ended with a spit and a sputter and a bit of a smile for me. But, how will 2007 fare, especially with a mysteriously rising DOW, a tag-along NASDAQ, and floating guesstimates about interest rates?

This is one time of year when I actually read forecasts provided by market strategists. The reason behind this madness is that I want to know what these people think so that I can measure future reality against their past predictions. The people with the most accurate guesses are the ones that I may listen to in the future - at least for a day or two.

Where do I find these financial predictions? Just about anywhere, actually. Newspapers and magazines that focus on money, online venues, and gossip at holiday parties all provide ample evidence of palm readers and crystal ball diviners.

BusinessWeek (BW), for one example, offers a great first-of-the-year annual prediction article, and this year is no exception. You can find their 2007 version online, where they tout the fact that they interviewed 76 "stock market seers" for their 2006 article. These strategists all came within less than a percentage point below the consensus estimate on the Dow Industrial Average's mid-year close. "In fact," they spout, "more than 20 strategists came within 100 points of predicting where the Dow would be at the end of June."

Despite this primping, BW's annual "fearless forecast" provides a great overview of the market in their print version. For their online version this year, BW chose four very different analysts who offer four equally disparate predictions. Their choices provide at least one clue about what to expect for the upcoming year.

If the majority of analysts in December 2005 spoke in unison, and if the December 2006 analysts aren't in such accord, then no one really knows what will happen, in my opinion. But, these widely varying forecasts offer a great chance to learn which strategist might be on the money this year (if any).

If you dare to read these four somewhat gloomy forecasts, then you might want to also read the responses to the article from readers. I can't figure out which ones are more down-in-the-mouth - the analysts' outlooks or the readers' byte-backs. After I read it all, I took a nice long hot bath and thought through all their remarks. Here's what I decided:

1. First, all the analysts in this article are men. Second, the respondents also seem to be men, and one reader (at the time of my reading) wrote three responses so he skewed my analytical efforts. While I don't want to be sexist, I can't help it in this instance - I wondered what women would say to these analysts, especially female long-term buy-and-hold investors? (This article provides one response from a woman, which I think you'll agree - at least by the end - is much more positive.)
   
   
2. Another skewing to the responses includes that fact that most people who respond to articles and surveys are those who have sour grapes to share (you could learn this fact in any statistics class). So positive responses to these predictions will be difficult to find.
   
   
3. Any end-of-year article and response might be colored by those gosh-awful feelings about getting older, gaining weight, the sadness about the end of the old and the fears about the beginning of the very unpredictable new, a desire either to make resolutions or to hang the whole shebang up by its bootstraps. This year's leaf turning was especially difficult, as the daily news over the holidays was sad, tragic, and worrisome. Unfortunately, this year, little was heard otherwise. Unless, of course, you consider the airline pilots who thought they saw a UFO at Chicago's O'Hare airport. Even that last news was more frightening than enlightening for several reasons?¹
   
   
4. Finally, the rare four-day closing of the stock markets as the years changed from 2006 to 2007 offered another insight to this entire prediction problem (this was the first four-day closing of the market since 9/11). While I could picture some day traders and short-term investors biting their nails on Tuesday, 2 January, as they waited for the markets to open the following morning, I soaked in my tub, relaxed and calm, and plotted my 2007 investment strategy. I realized at this point that long-term buy-and-hold investors really don't care one whit about one year's worth of predictions. They care more about a company's plans for the next five to ten years (among other bits of pertinent information, of course).

I think I'll pass on professional predictions this year and focus instead on my own forecasts. No one knows my portfolio or my financial goals like I do, after all. Plus, I want to float around in a hippy-dippy dress and headscarf this year as I read palms and Tarot cards (Finally - a New Year's resolution that sounds fun!). I'm sure I'll look much better in that garb than any man interviewed by BW.²

Until Next Week,
Linda Goin

1. At least one O'Hare controller, union official Craig Burzych, was amused by this incident, according to the Associated Press. "To fly 7 million light years to O'Hare and then have to turn around and go home because your gate was occupied is simply unacceptable," he said.
2. No, not all seers wear outdated clich?s, let alone dresses. I'm an aging, nostalgic former hippie, and I want my resolution.