Friday, January 8, 2016

The Economy

On 12-12-14 I wrote: "In 2008 oil fell by $100 a barrel in 6 months (a 75% drop)! If oil follows the same path we could see oil at close to $30 before it stops falling. Now that sounds unlikely, but it has happened before, so why would this be different? What is also interesting is that stock prices eventually followed the price of oil. The S&P 500 fell from 1560 to 666, a fall of about 60%. So we could see stocks fall by as much as 50%. That would put the S&P 500 easily below 1000. So here is what I am predicting. Oil will fall below $40 and the S&P 500 will fall below 1000. Unfortunately I can’t put a date on it, but I would think that within six to nine months to be reasonable. Wow, things are going to get ugly."

That was over a year ago and maybe my prediction is finally coming to pass. Oil is well below $40 and the S&P 500 has had it's worst first week of trading of the the year ever. With the S&P 500 closing at around 1900 today, there is a long way to go. It could get very ugly this year.

What do you think?