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Comment: |
Edward Yardeni, economist for Deutsche Morgan Grenfell, is the first well-known forecaster to warn about the possibility of a y2k-related recession in 2000. This is a reversal -- or major modification -- of his prediction of a Dow 15,000 by 2005.
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In August you were saying Dow 15,000 by 2005. Do you still believe the market will rally to those levels?
I indicated that I doubted it would be a straight-line move -- that somewhere along the way there could be a significant sell-off. I think any investor and any economist or strategist giving advice has to remain flexible. I'm not forever and ever wedded to these targets. And I think there's a lot of risk now. Even though I think there's a possibility of getting to 10,000, say, in the next 12 to 18 months, I think there's probably more risk in the stock market today than I can recall in the past 10 years. The risk/reward ratio here actually favors bonds over stocks over the next couple of years. Again, this is not to say that the market can't make new highs here. I suspect it will, partially because there aren't too many others that are all that concerned about the year 2000 problem.
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