Results of the reader survey we conducted a year ago reveal as much about the biases of our editors as about our readers, who generally had good instincts about how 2003 would turn out.
As financial markets closed out 2003 the Dow stood above 10,400, up more than 25 percent from its close a year ago and about 1,000 points higher than we imagined it could go when we were designing our survey in December 2002.
Our lack of imagination was even more pronounced on the Nasdaq composite index, which rose 50 percent in 2003 to close at over 2,000. When we were designing the survey we figured we would be lucky to see the Nasdaq gain more than 15 percent, which would have brought it just past 1,500.
The upshot is that choices for readers in last year’s survey were somewhat limited, with the most optimistic choices representing a far smaller gain than what was actually achieved.
That said, only 36 percent of the 64,000 readers who responded to the unscientific survey by mid-January correctly predicted the Dow would end 2003 at or above 8,900, the highest option offered. Another 36 percent thought the Dow would end at 8,100 to 8,900, the second-highest, while 28 percent incorrectly predicted a fourth straight year of steep losses.
Similarly, when asked about the fate of the Nasdaq, only 22 percent correctly guessed the tech-heavy index would end this year above 1,525, the highest option offered. About 29 percent predicted another year of steep losses, while the remaining 49 percent predicted either a slight loss or modest gains of less than 15 percent.
Presuming the unemployment rate ends the year unchanged at November’s 5.9 percent level, about 20 percent of our readers predicted the outcome accurately, while another 33 percent guessed it would end up at 5.3 to 5.7 percent, which was also pretty accurate, given the available choices.
Nearly half the readers correctly guessed the benchmark federal funds rate would remain below 1.5 percent, and 42 percent accurately predicted that fixed-rate mortgages would remain below 6.25 percent.
Now give us your best guess about 2004: