Investors prepared for market to fall much further
As the Dow Jones Industrial Average headed toward a 390-point drop by Friday's close, we invited readers to weigh in on where they forecast the Dow's bottom. Unfortunately, it's well below the blue chip index's 8,019 close.
As of an hour after the close, the median level at which 13,000 respondents saw a bottom was in the 7,000 to 7,500 range, which drew 22 percent of the vote. Thirty-nine percent saw it above that level and 40 percent below.
On a grimmer note, 30 percent expect the Dow to drop below 6,500 - at least another 19 percent lower -- before a turnaround occurs.
"I see this as a change from complacency," said Gail Dudack, chief investment strategist at Sungard Institutional Brokerage Inc. in New York. "I don't think you would've gotten 30 percent saying the market could get to that level even a month ago."
Contrarians may read the results as a sign the bear market is approaching its grand finale, said Jim Bianco, president of Bianco Research in Chicago.
"Generally, the public is very optimistic, and this does not sound like the public is very optimistic at all," he said. "If you want to be bullish, this is what you want to hear out of a poll like that."
At 29 percent, the next biggest reader consensus put the Dow's market bottom higher at 7,500 to 8,000. Ten percent saw it falling no lower than 8,000, and another 10 percent expect it to bottom-out between 6,500 and 7,000.
The informal survey provides a snapshot of those inclined to think negative, but it failed to address questions such as how many readers consider this is a buying opportunity to balance the bias, said John Bollinger, president of Bollinger Capital Management in Manhattan Beach, Calif.
The poll supplies an "important piece of information, but I don't think it's the whole story," he said.
Of course, we are a product of the surrounding mood: The percentage of people who foresaw 6,500 or lower grew throughout the day -- from 22 percent around midday to as high as 32 percent as the Dow accelerated its fall. Borrowing from Fed Chairman Alan Greenspan, just call it "Infectious Gloom."
