7 'Sure Thing' Stock Market Predictors Put to the Test

Sports Illustrated
Sports Illustrated

There's an old investing adage that says, "As January goes, so goes the year." And this year, the Dow enjoyed a gain of 4.4% in its first month -- auguring a propitious 50% gain in the Dow (had it kept up that performance). Good news, right?

Well, it would have been, except for one thing: common sense.

Had the Dow continued rising at the pace set in January, we would end 2012 with the Dow at 18,000. And with the U.S. in the middle of a stuttering recovery, and much of Europe grinding back toward recession, Dow 18,000 was never very likely.

That's the problem with trusting in market "truisms" like the January theory. When they defy common sense, expecting them to perform as billed is pretty nonsensical. Anyone who bet on Dow 18,000 -- or even the Dow 15,000 implied by the market's course through April -- was bound to be disappointed.

But the January theory isn't the only one suffering from leaky logic. Several other "sure thing" theories, common in investing circles, may not hold water either.


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