Market "Experts" Don't Know Squat

You don't have to look hard to find people making bold predictions about which way the market's going to move in 2009 and beyond. Consider some of these well-known prognostication tools:

1. According to Elliott Wave Theory, which has often been bearish, the big losses of the past year and a half have been severe enough that an explosive bounce off recent lows may come soon.
2. The Dow Theory holds that because both the Dow Industrial and Transportation Averages both hit new lows in the recent downturn, the bear market will continue.
3. Technical analysts point to the S&P's violation of the November lows as evidence that another big drop may be on the horizon.
4. The Steelers won the Super Bowl, which may mean that stocks will rise (because they're an old NFL team).

Pop quiz: Which of these factors will tell you with definitive certainty which way the market's headed in 2009 and beyond?

The answer, of course, is none -- and you certainly shouldn't bet your life savings on any of them.

Stop guessing and start investing
In this month's brand new issue of the Fool's Rule Your Retirement newsletter -- which is available online this afternoon at 4 p.m. EST -- Foolish retirement expert Robert Brokamp takes a close look at whether buy-and-hold investing still works. In weighing the arguments, he looks at a host of other ways that stock analysts try to determine the future direction of the stock market, along with how successful they've been.

Robert's conclusion is simple but powerful: Although none of those methods works perfectly all the time, there are signs you can look at to gauge whether stocks are likely to perform well or not in the future. So even though things like low price-to-earnings ratios, high dividend yields, and low interest rates may often precede strong periods for the market, hedging your bets by focusing on the long run can prevent you from making costly mistakes.

Boundless irrationality
The main problem with making big bets using indicators is that when they're wrong, you can lose a bundle. For instance, back in 1997, the stock market was setting new records. Many stock analysts thought that shares were overvalued and recommended getting out.

Yet those who did missed out on over two years of future gains -- and for some stocks, that provided some of the top returns of the 1990s bull market. Consider:

Source: Yahoo! Finance.

Meanwhile, in September 2002, bond guru Bill Gross argued that the Dow would fall to 5,000, because dividend yields were incredibly low despite the market's tech-bust drop. Not only did dividend-paying stocks recover strongly in the following years, but they also managed to boost their payouts enough  that their dividend yields actually rose, despite substantial share gains.

Source: Yahoo! Finance.

Follow your own path
I'm not saying that listening to other people's opinions about the market has no value. Finding out how others think about investing always adds to your knowledge, even if you disagree. This month's Rule Your Retirement includes the views of many commentators, some of which are at odds with Brokamp's own philosophy.

Listening to others is one thing, but blindly following them is another. As you try to figure out your own investing strategy, you need to tailor your investments to your own needs. That's where Rule Your Retirement can help -- not by professing to give you one-size-fits-all recommendations that are short on reasoning, but by teaching you how to put together a portfolio that's right for you.

Take a look and you'll see what I mean. If you're not a RYR subscriber, don't give up -- have a free pass on us and take the next 30 days sampling everything you can learn from the newsletter.

To make the most of your retirement, read about:

• 5 top financial lies you should never follow.
• The worst move you could make right now.
• 3 myths that could cost you plenty.