A Case of In-Fidelity

Under the headline “What’s next? A perspective from Peter Lynch,” the investment guru — now the Vice Chairman at Fidelity Investments — acknowledged in a full-page ad in the New York Times on September 30, 2001 that the market is going through difficult times. But he declared that, in the long term, the “stock market has historically been the place to be.” In other words, stay invested. So far, so good.

But there is one paragraph near the conclusion of Mr. Lynch’s essay that gives the careful reader pause and, upon reflection, does not sound all that reassuring. Here it is:

“Which way the next 1,000 or 2,000 points in the market will go is anybody’s guess, but I believe strongly that the next 10,000, 20,000 and 40,000 points will be up.”

While some people might consider this a statement of confidence, it may also be a sign that even Mr. Lynch’s considerable forecasting powers are at their wits end.

The reason is simple. The Dow Jones Industrial Average currently stands at around 8,800 points. And since it cannot possibly fall below zero points, any movement of “the next 10,000, 20,000 and 40,000 points” by definition can only be in one direction — up.

Most likely, this is just an innocent mistake. While we welcome Mr. Lynch’s attempts to reassure investors in these difficult times, he should be a bit more careful about the exact phrasing of his predictions.