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This is the time of the year for economists and market analysts etc.,to make their annual predictions. A year ago the majority of the economists and market analysts were in agreement in predicting a boom year for the economy as well as the stock market. Six months later no boom appeared in the economy or the stock market. In fact, the market collapsed and the economy remained relatively unchanged.
At mid-1962 their predictions changed to gloom. They were predicting a bear market and a recession. Neither appeared again. The market rallied sharply. In fact, we had oneof the sharpest rallies in the history of the stock market and the economy continued on a high plateau.
For 1963, the majority of the economists have once again changed their thinking. They now have a third prediction-one of more or less neutrality.
Some of them are predicting a slight down-drift in the first half, followed by a mild recovery in the second half, and some are anticipating an increase in the first half, followed by a slight decrease in the second half.
In summary, they have no strong predictions for the year. By and large they expect a side wise movement in the economy and the stock market.
It appears to me that once again their predictions will be wrong. I do not believe the economy will spend another year of unchanged activity, nor do I think the stock market will remain in a narrow trading range as most analysts anticipate. Based on the long term trend of our nation’s economy, it appears more likely for the change to be on the up-side.
Consequently, I see a good year, generally, for the stock market. However, we must bear in mind that a good deal of, damage was done in the May-June break and again in the October break (the Castro crisis).
Fortunes were lost and a great deal of confidence shattered. The market’s healing process is a slow one. It takes a great deal of time to restore full confidence. Reactions will occur. Some will be minor and some will be sharp. When the rallies ensue, not all groups will participate.
Once again we should have a selective year in the stock market although the basic trend should be upward.
There are many areas of unknown factors, such as the tax cut situation, the international situation and the gold situation.