And The Winner Is...

The S&P 500 Index closed the year at 1115.10, 23.5% higher than its closing price at the end of 2008. While on the surface that seems like a good performance, consider that the S&P 500 is still 24% below its year-end 2007 level, and nearly 30% below its late 2007 peak. It was an extremely volatile year, considering that the Index ranged from a low of 666.79 in March, to the recent high of 1130.38. The stock market's rally off of the March lows has been nothing short of extraordinary, and doesn't seem to be entirely supported by the fundamentals. I'd have to think that we'll see a correction (defined - for our purposes - as a 10% decline from a peak) sometime during the first quarter of 2010. However, in a larger sense, given the more stable nature of recent corporate earnings (fueled almost entirely by cost-cutting efforts) and the persistent, extremely low level of interest rates and bond yields, stocks do not seem to be that badly overpriced.

Now that we have a final 2009 reading on the U.S. stock market, we can officially determine the winner of The First Annual IcebergCarwash Stock Market Prediction Contest.

Here were the entries, showing both the projected closing level of the S&P 500 Index, as well as the projected return:

MBB 1034.00 (projected 2009 return of 14.5%)
Wolfman (1) 1625.00 (79.9%)
Wolfman (2) 434.00 (-52.0%)
firstpob_moo 1100.00 (21.8%)
Doobie 1489.00 (64.8%)
fil 519.00 (-42.5%)

As you can see, the winner is firstpob_moo, with a prediction that came within only 2% of the actual result. As they say in the South, "that's some fancy predictin'."

As the winner of the contest, firstpob_moo will be presented with the prize we revealed in the previous post, also known as "The T-Shirt of Knowledge and Coolness."

Thank you to all of our contestants. Predictions aside, when the stock market goes up, we all win. Unless, of course, you shorted the market. In which case, the SEC believes you are behind the current economic malaise. So, congratulations for being the root of all financial evil. (Everybody wins at IcebergCarwash).

As a reminder, it's not too late to join the 2010 contest. Just go to this post, and enter your prediction in the comments section. Entries must be received before 9:30AM EDT on Monday, January 4, 2010.