Don't Worry About Predictions for 2008

With high hope for the future, no prediction is ventured.
-- Abraham Lincoln

As we kick off the new year, there is no shortage of predictions about how the market will act. Even in the face of consistently poor financial and economic news, there is quite a bit of optimism that the major indices will manage to have a pretty good 2008.

Rev Shark's 2008 Resolutions

As always, there are some bears who believe that we are in for a real pounding, but the predictions for 2008 -- especially the second half of the year -- are for the most part fairly upbeat.

Should we care about the predictions for 2008? Absolutely not. Optimism is usually more empowering than pessimism, but whether we make money has little to do with predictions.

What I know for certain about 2008 is that there will be plenty of ups and downs. We are going to have some good uptrends and some nasty downtrends no matter what the news might be. Where we ultimately finish the year will matter little. It is how you play the game.

On Dec. 31, 1999, the S&P 500 closed at 1469.25; on Dec. 31, 2007, the S&P closed at 1438.36. So over the past eight years, the S&P 500 is essentially unchanged, but the opportunities to make money during that period were tremendous. If you had relied on a prediction that the market would be flat for eight years, you'd have ended up with nothing, but if you simply watched for opportunities to develop over time and jumped in when conditions were right, you likely did pretty well.

So let's not worry too much about those predictions. The key is to be optimistic about our potential to make money no matter what the market beast may do. If we stay open-minded and flexible and protect our precious capital, we always have the potential to make some money.

We are starting the new year on a slightly positive note. There are quite a few analyst reports out there moving things this morning, and oil is higher. Overseas markets are mixed and market players are moving a bit slowly so far.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.