This Recession-Predicting Tool Hasn't Been Wrong in 57 Years. Here's What It Says Happens Next for the U.S. Economy and Stocks.
Over the long term, there's no asset class that's consistently delivered for investors quite like the stock market. Even accounting for inevitable down years, the average yearly return for stocks over the very long term has handily outpaced the annualized returns for bonds, gold, oil, housing, and pretty much any other asset class you can think of.
However, it's a completely different story over shorter timelines. The only constant on Wall Street when examined over the course of a few months to a couple of years is inconsistency. Since this decade began, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S 500 (SNPINDEX: ^GSPC), and growth-powered Nasdaq Composite (NASDAQINDEX: ^IXIC) have traded off bear and bull markets in successive years.
Although it's impossible to predict directional moves in the Dow Jones, S 500, and Nasdaq Composite with 100% accuracy, this doesn't stop professional and everyday investors from trying. Investors will often turn to predictive tools and select economic datapoints that have historically correlated strongly with moves higher or lower in the three major stock indexes.
Source Fool.com
