Fool Poll: How Low Will the Dow Go?

Markets all around the world are a disaster. Fear is in control and it's not just mad … it's mad as hell.

The Dow Jones now sits about where it did in 1998, when cell phones where a novelty and Al Gore's invention -- the "information superhighway" -- was just warming up. Citigroup (NYSE: C  ) hasn't been this low since 1996. General Motors (NYSE: GM  ) sputters along at the same level it did in 1950. Even Warren Buffett is in the red with his recent investments in Goldman Sachs (NYSE: GS  ) and General Electric (NYSE: GE  ) .

All around, it's a mess. Credit markets are frozen because of fear, and fear breeds out of the credit markets being frozen. Short of yet another radical bailout, it's pretty tough to tell where we'll go from here.

As grimacing as it is to watch, the recent market turmoil will eventually bottom out: The obvious questions are when, and at what level. 8,000? 7,000? 5,000? Zero? Two weeks ago you would have drawn a wave of blank stares if you said we'd be where we are today, so nothing's out of the question.

Here's our question for you today: How low will the Dow go? Take a moment to weigh in via our Fool poll below. Click here for more Foolishness on the market's panic, and feel free to let loose and vent in the comments section below.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.


Read/Post Comments (17) | Recommend This Article (21)

Comments from our Foolish Readers

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  • Report this Comment On October 10, 2008, at 11:36 AM, caffinatedmouse wrote:

    I put a poll on Hidden Gems about a year ago asking the same question. I forecasted a dow at about 8,300. Looking back, it was a pretty good guess, but I'm guessing it will go lower now (because of how governments have / haven't dealt with the issue very well yet). Everyone thought I was crazy, even me. Guess I should have trusted my own judgement and waited it out a while... I figured it out from reading Nouriel Roubini for the last 3 years. Everyone called him Dr. Doom, but now he's refreshingly pragmatic. Hold on tight everyone, and keep investing!!

    fool on!

    Robert

  • Report this Comment On October 10, 2008, at 1:13 PM, QuirkyDi wrote:

    6000. Retiring Baby Boomers will be forced to liquidate their 401K's at the worst possible time. Age demographics are working against the market.

  • Report this Comment On October 10, 2008, at 7:12 PM, jlmjlm77 wrote:

    It seems that no one really believes the bottom has come. I don't want to buy anymore now, so it's probably getting close.

  • Report this Comment On October 10, 2008, at 9:45 PM, markwg1 wrote:

    The market is still in extreme panic condition (VIX index to a new high) + rising foreclosures (107 500 homes lost in September. Link: http://www.marketwatch.com/news/story/us-foreclosures-index-... + rising bankruptcies ( up 93% VS August 2007. Link: http://www.inlandnewstoday.com/story.php?s=4199).

    It's too early to call 8000 is a bottom... I will say the market will drop more to 4000 before it can find a bottom.

    Similary in Japan, bankruptcies (up 34% vs last year. Link: http://www.reuters.com/article/rbssFinancialServicesAndRealE...

    foreclosures soared to a record level as well...

  • Report this Comment On October 10, 2008, at 10:30 PM, Frogtree71 wrote:

    The market bottomed today. Next week will see level heads snapping up the bargains...don't get left behind!

  • Report this Comment On October 11, 2008, at 12:03 PM, TexanSooner wrote:

    If central banks can inject enough liquidity to calm the markets, we may be close to a bottom, however I don't think they can react quickly enough to do so. Those who are using mortgage backed securities as collateral for debt won't be done seeing those instruments tank as more people lose their jobs and default....

  • Report this Comment On October 11, 2008, at 1:36 PM, eightzeroes wrote:

    I believe there is more room to drop - I think we'll see below 6,000. Next Spring we'll see some recovery and hopefully stabilization around 8 - 8,500.

    The Feds would have inspired more confidence if they would: 1. ) arrest & convict those involved. 2.) enforce immigration laws. 5-million illegals have defaulted on their home loans.

    I'm tired of our system being drained by liberals who want to live high on the hog for themselves yet give away what the rest of us have earned.

  • Report this Comment On October 11, 2008, at 2:08 PM, laogao wrote:

    "The trend is your friend" and the trend is down. Any long new investments should be strictly with "Vegas" money, money you can afford to lose, and I don't think many of us fools have much of that, looking at the difficulties ahead.

    People at lunch are talking about buying stocks - apathy and desperation are not strong enough yet to form a bottom, but maybe a bounce. After a bounce, we could drop through 5000 in a couple of weeks.

  • Report this Comment On October 11, 2008, at 2:13 PM, stockmt1 wrote:

    I will say there will be more financial, insurance institutions to collapse (already 2 more banks failed on Friday) in months ahead. The worst has yet to come... who's going to pay the insured credit default swaps? In Lehman Brothers' case, the payouts is expected to be in between 400 to 600 billion. Link: http://www.nytimes.com/2008/10/11/business/11credit.html?em

    More banks, insured companies going under for sure in the months ahead... remember, CDS is not a regulated market and its size is more than 55 trillion... 5 times more than the size of US GDP.

    It's probably now too late to rescue the banks or create the market for CDS... given its size, number of clients involved, etc.

  • Report this Comment On October 11, 2008, at 5:11 PM, badsituation wrote:

    All the people in the government do not know what they are doing. What is the point for buying the financial stock? increase the stock price? The problem is not their stock price. The problem is people has no money and they spend more than they can. If they don't solve this problem. Then I would imagine that in the next 2-3 yrs, the unemployment rate will go up to more than 20%. And I would also imaging that housing in san francisco area will be around $150K in the next few yrs.

  • Report this Comment On October 13, 2008, at 12:49 AM, Masug wrote:

    No body knows. If they knew it exactly, they would be making money instead of spending time posting on this website.

  • Report this Comment On October 15, 2008, at 2:35 PM, babyboomerbust wrote:

    While corporate greed ran rampant and the cost of food and fuel were skyrocketing, workers were being subjected to 3% increases in pay. I checked the CPI (including energy and food) for the 12 months ending August 2008 and it's nearly at 7%. Labor contracts are being negotiated for cola increases for the next 3 years at 3%. Gone are the days of merit increases. The affordability ratio is out of whack. Recession...inflation...depression. We need a change and until salaries are kept up with the cost of living, it will struggle to happen.

    I recall half way through my working years when I was told by my employer at the time, a corporate giant, that I needed to start funding my own retirement. Also, I was told I needed to start paying part of the once 100% corporate funded healthcare premiums. So the paycheck I am earning is not only used to live for today but also a part of it needs to be put aside to fund my future. And, so came the 401k plan. If you didn't invest in stocks, you were left with a flat portfolio yielding very little interest. How can you retire on that? To add insult to injury, if you're not knowledgeable about investments, etc., well, you're left out in the cold, literally.

    This $700 billion dollar bail out will be paid for by taxpayers. The baby boomers are the taxpayers. Now that they have started retiring, this burden will be left to the next generation. And how will they be able to afford that in addition to funding the boomers' social security benefits and Medicare?

    The next President needs to make changes in the way Corporate America does business. I'm tired of throwing my hard earned money their way for my retirement while they live fat and high on the hog. Enough already!

  • Report this Comment On October 19, 2008, at 1:27 PM, jemstate wrote:

    After voting in the "bottom of the Dow" poll, I looked at the poll results. You know, it is unsettling when I find myself in the majority. Why? Because it is a herd mindset which got us into this fix. This leads me to question my perception that Dow 7500, or thereabouts, is the bottom. I work at the wholesale level in the building materials industry. Virtually all of my customers' businesses have experienced declines of 40-50%. Most have reduced their head counts by a similar number. My company's strategy of maintaining readily available inventories with attractive credit terms to support our customers has proven successful. Our billings are "only" down 32%. I realize I'm stretching here, but a Dow of 7500 correlates pretty well with our billings decline of 32%. However, my customers' averaged billings decline of 45% smells more like a Dow at 6500. Uncertainty is the certitude of the day.

  • Report this Comment On October 21, 2008, at 6:46 PM, wordmaiden08 wrote:

    We saw the DOW drop 3500 points, give or take, during the tech bubble burst. We're already down 5000 and the failure of our financial system is much more dangerous than a sector going bust. 7500 would put us right back to a DOW during the bottom of the tech bubble. We're in for some wild swings but I bet on 7500 being the bottom. If you look at the DOW after 401(k) plans were enacted (Jan 1980), that's when big money hit the market and we started our ascent. It's interesting, at times like these, to revisit charts of the DOW over time. This is going to take 10 years to dig out of but we'll get there again. I stand to lose another 20% in the months ahead and then will start buying again. Let it roll and let's see where things go from here. But man, it is UGLY. Is anyone thinking about buying Fannie Mae? Seems like a sure bet with the government involved but I'm not even sure you can buy it now.

  • Report this Comment On February 17, 2009, at 1:51 PM, dmburke007 wrote:

    If you look at the History of the Dow Jones

    In 1929 with the crash, the down Jones fell significantly, but the real fall occured the following year 1930 where it lost most of its value

    The dow whent from the upper 300's down to the upper 20's.

    Our economy was ran like giant Ponze scheme where the value of homes and every thing else increased artificially thanks to the security default swaps and other finantial instruments. where there was so much upfront profits that everyone in the banking/insurance business did not bother considering the alternative. (GREED, and more GEED and irresponsibility)

    Now the bubble burst.

    The real difference between 1929 and today are the safety nets FDR placed., 100K insurance in checking accounts, Social security etc.....

    Politically I realy believe that the Federal governement cannot do anything and for political purpose are providing bail out plan (all borrowed moneys by the way) and printing more dollars since the interest rate cannot be any lower than 0

    In my humble opinion:

    There should be another new deal, Marshal plan for the US, and like the UK nationalize Health Care which will lower its cost and create real jobs in the industry and get rid of these Fat Cats CEO heading HMO's riping off patients. Administration costs for Medicare is only 1 to 2 %, Administration costs for HMO of over 40 %.

    Rebuilding infrastructure is important but States require a mandate to maintain transportation funds that cannot be raided for other reasons to maintain this investment.

    Reform Legal profession, and nationalize the legal system as well. Which is being ran like high way robery crooks.

    I predict Dow Jones will go down in the 4000's

    especially with this anemic bail out

    DB

  • Report this Comment On March 24, 2009, at 4:15 AM, FIOutreach wrote:

    I'm with Fisher Investments, and I found a good article about general market sentiment and how low will the market drop: “Invest for the Future, Not the Present” by Fisher Investments MarketMinder, 11/17/08 : http://www.marketminder.com/a/fisher-investments-us-economy-...

  • Report this Comment On May 15, 2009, at 6:15 PM, benjns wrote:

    I found another good Fisher Investments site on market misperceptions (I work there as well): http://www.fisherinvestmentsforum.com/stock-market-mispercep...

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