TSX Prediction Survey Results Are In - Is The Crowd Wise?

Thank you to those 22 intrepid souls who dared to predict where the bottom of the current stock market slump might end up.

A three-word summary of the survey opinion is "watch out below!". Though we are substantially above the low of 7724 set when I started the survey - at least as of right now the TSX Composite is around 8640 - pessimism, or is it hard-nosed realism, reigns. The median and the average of votes was that the TSX will fall to 6000 before we reach the base of the abyss. That's more than 30% down from now.

This post's title refers to the popular book by James Surowiecki, The Wisdom of Crowds, in which he gives numerous examples where taking the average of estimates from independent, diverse sources can give better predictions than those of experts. Part of the problem with the market these days however is a seeming lack of independence because everyone is tainted by a common negativity. Is our survey "crowd" wise or are we just a mob carried away by our own pessimism to a form of group-think?

We'll find out for sure within the next few years, at which point, if the survey prediction proves correct, I'll write another post claiming credit for how wise the readers of this blog are! ;-)

I'm not about to short the TSX, though. I'll just stick with my asset allocation and wait it out because in five to ten years the market will have recovered. That's my prediction.

A New Survey on the Future of the Stock Market

Every passing day seems to bring another gigantic drop in the Toronto Stock Exchange (along with every other stock market around the globe). A few weeks ago I thought things had reached bottom with the end of the panic selling in the terror phase. Now it seems we are in the despair phase.

Will the decline ever end? Was yesterday's 766 point 9% drop in the TSX the bottom? How much lower will it go? If you have an opinion click on the survey in the right column.

My own best guess is a bottom around 7500 or 50% off the peak, based on what other credit crises have done in the past. What's yours?

Integrity of the Financial Services Industry

The observant reader will note in the right column a new survey asking your opinion of financial services professionals. When the survey closes in a week, I will contrast the results with some interesting reading I came across today where financial services professionals rate themselves in Canada, the US and the UK. Should be fascinating, huh?

So enter your vote and remember, be fair!

New Survey: Your Reaction to Market Drop

Well, the TSX is down 900 points in three days and if you are internationally diversified and watching other stock markets, you are seeing that in times of crisis, positive correlation reigns, with the S&P 500 down, the FTSE down, the DAX down, the Hang Seng down and so on. The only positive note is that the Canadian dollar has been sliding too so the foreign holdings are not dropping quite as much in C$ terms as they would have with a constant exchange rate. That's a diversification value.

Along with the slide there is the predictable article that accompanies all bear markets - a piece on the CBC website that tells small retail investors like you and me not to panic and sell out. Hmm, most of my friends and family are too busy going to work, watching hockey games, helping kids with homework etc to do more than watch in puzzlement and helplessness as the indexes plummet. Could it possibly be someone else who is doing all the selling, possibly the big boys of the investment houses, the hedge funds, the pension plans who have the vast majority of the money in the market? In order to test this hypothesis I am launching another mini survey for my blog readers to see how many of us small investors are bailing out and how many are hanging tough. If you are reading this and have $100 million or more under your control, please don't answer as the survey results will get skewed and unscientific.

Survey Results: Number of Times Laid Off

The results are in for the survey question "how many times have you been laid off in your career?". Thirty-five brave people answered as follows:

• 17 (48%) Never
• 6 (17%) Once
• 5 (14%) Twice
• 7 (20%) More than twice

On to the next fascinating topic to survey.

Job Loss Survey, Emergency Fund and Bounce Book

Thanks to all who ticked a response to my latest mini survey about how many times you have been laid off during your working career. Though the survey is unscientific and comprises a very small sample, the fact that about half of you have been laid off at least once confirms to me that planning and for and making provision for a job loss is important for most people, as I had concluded in my previous post on Emergency Funds: Job Loss.

In a few weeks, I'll be reviewing the newly published book Learn to Bounce, which is about the experiences of a whole raft of people caught in the technology meltdown of 2000, how they turned a negative into a positive in their life. Written by Lee Wallace and friend and former colleague Anita Caputo, the very concept of the book - to show with real examples that a job loss disaster is not necessarily the end of the road - appeals to my philosophy: never give up and never be a victim.

New Feature - Survey

New fun feature added today, a survey of what you my readers think. No logging of your identity or info takes place, just your reply. Google has recently added a small survey tool to the capabilities of Blogspot so let's try it out. Maybe it will give me more topics to write about, though goodness knows I have a backlog of topics I want to look into and blog about.

As for this first survey, the stuff I find most complicated is definitely insurance. Looking forward to everyone's answers.