Expectations for 2009 – Economy vs Stock Market

You might have already read or heard many stock analysts or economists or whoever talked about their opinion or predictions for 2009.

Here's another one, from Gabriel Gan who wrote in the latest issue of Shares Investment Guide. Key points:

1. In 2009, we can expect earnings downgrades to come even more ferociously as company profits are expected to fall by greater magnitudes.
2. First quarter is expected to be bad and share prices are not expected to fall much on bad earnings. He is still positive about the first quarter and, possibly, the second quarter.
3. Second and third quarter earnings will be the key because investors expect a recovery in the second-half of the year. If earnings continue to show more weakness in the second and third quarter, it will likely spook investors into thinking that we are far away from a recovery. He will be more cautious as we approach half-time because expectations of a recovery, if not met, will result in disappointment. And this will not be good for the stock market.

It is the investors' and stock market players' expectations about the economy and company that will affect the stock market. It is the psychology or emotions of these market players that will affect the stock market direction.

So Where is the Stock Market Heading?

Those who can forecast or predict the emotions of these market players would know.

Read My Crystal Ball and you would know!

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