A Prediction About Predictions

Nouriel Roubini, probably the economist of the moment (for good reason) predicted a few days ago that the Dow would bottom out at 7,000 by the middle of next year. Well, it sure looks like it's headed that way now, and it's looking like it'll get there sooner rather than later.

I won't claim to have any opinion on a natural or reasonable value for the market. The thing about Roubini's prediction is that it feels like one of those numbers that the crowd consensus converges on, and when that happens markets tend to get to the number pretty fast. You can think of Goldman analyst Arjun Murti's 2004 projection that oil would hit $100 a barrel, the super-spike. Or Henry Blodget's prediction that Amazon.com's stock would go to $400.

These kinds of predictions don't create the underlying moves--sorry, it's not Roubini who's causing the crash, don't shoot the messenger, we'll need him later. But they get the market to where it wants to go faster. And this kind of market, like the pit bull that's broken its leash, is going to go where it wants.