Thoughts, ideas and insight from the top minds in the investment world
Barry Ritholtz of FusionIQ and The Big Picture blog offered his predictions for 2010 in this recent interview on Yahoo! TechTicker. Among the surprises Ritholtz expects: He sees a potential 30% to 40% rise in the dollar, and, possibly, a major pullback for gold.
Since the financial crisis hit last fall, one of the most-used terms popping up in stock market and economic parlance has been “the new normal”. Often attributed to PIMCO’s Bill Gross, the term is used to describe the slower-growth, lower-return environment that many say will confront investors in the coming post-overleveraging period.
But are we indeed heading for a “new normal”? And is “the new normal” really a new idea? No on both counts, says MarketWatch’s Paul Farrell.
‘Warning, you’re being misled (again),” Farrell writes. “Big time. We wrote about the same ‘New Normal’ baloney back in 2002. Back then it was Warren Buffett and Jack Bogle: Two big-shot investors, bigger than Gross and Pimco. And yet, if you had relied on Buffett-Bogle’s ‘New Normal’ hype back then you’d have missed the profitable early upswings of the 2003-07 bull market.”
Continue reading ‘New Normal? Don’t Count on It, Says Farrell’
Hedge fund guru John Paulson thinks Treasury yields are going to rise, and he and other hedge fund managers are positioning their portfolios to benefit.
Paulson recently told the Financial Times that he has been buying options that would make money if Treasury rates rise. The Times reports that TPG-Axon’s Dinakar Singh has been making similar options trades, and well-known hedge fund manager Julian Robertson “has pursued a related strategy, hoping to benefit from a bigger difference between short-term and long-term interest rates, known as a steeper yield curve.”
Paulson has previously said that he thinks major inflation, and thus higher yields, is coming for the U.S.. “It will be difficult for the government to withdraw the economic stimulus,” he said in a speech, according to the Times. “An increase in the monetary base leads to an increase in the money supply, which leads to inflation.”
Laszlo Birinyi, who called the current market rally, sees stocks’ bullish run continuing into 2010. Birinyi tells Bloomberg that the economy will surprise to the upside, and that there will be more and more of a “drift” back toward stocks. He also says history shows that while the rally has been fast and steep, a major correction doesn’t have to be imminent, as some fear.
Each week, I take a look at which stocks my Validea.com Guru Strategy computer models have newfound interest in, and which they have soured on. Here’s a look at some of the stocks that my strategies have upgraded or downgraded today.
As the new year approaches, the investment newsletters with the best track records of success in both up and down markets are on the whole bullish, MarketWatch’s Mark Hulbert notes.
According to Hulbert, the average recommended exposure to the domestic equity market among the newsletters making his 2010 “Honor Roll” is 82%, significantly higher than it was last year at this time, when the average was just 63%.
Hulbert’s “Honor Roll” is comprised of newsletters that have a market-beating track record in both and up down markets — criteria that only about 12% of the newsletters he tracks meet, he says. “The services that have made past years’ Honor Rolls have proceeded, on average, to outperform those that failed to make the grade,” he notes.
Continue reading ‘Top Timing Newsletters Bullish Heading into 2010′
The strategists that Barron’s surveyed for its 2009 investment outlook have ended up faring pretty well as a group, with their average S&P 500 forecast of 1045 coming in about 6% below the index’s current level. Now, the dozen strategists that Barron’s is surveying this year are predicting more modest gains for 2010.
The strategists — half of whom participated in last year’s survey and half of whom are new — are predicting that the S&P will rise an average of about 12% in 2010, finishing the year around 1239. “The rough consensus among this group is that stocks are good investments, what with cash earning nothing and Treasury yields pathetically low,” writes Barron’s Kopin Tan. “But the case these strategists make for stocks is peppered with caveats and ‘buts,’ and their year-end targets range widely, from 1120 to 1350.”
Continue reading ‘Top Strategists See Moderate Gains in ‘10′
In a new interview with WealthTrack’s Consuelo Mack, ISI Group’s Francois Trahan and Ed Hyman — two of the top-rated strategists in their fields — offer their takes on where the market and economy will head in 2010.
Trahan, ISI’s chief investment strategist and Institutional Investor magazine’s 2008 top-ranked investment strategist, told Mack that he thinks 2010 will involve a shift from a broad market rally to a stock-picker’s market. “I think it’s going to be a much more challenging year, and I think you’re really not going to make your money on the big market call up or down,” he said. “I think you’re going to make your money on the sector picks and really the traditional stock picking.”
As part of its 2010 preview, PBS NewsHour asked some top economists what they think will be the key economic metric to watch in 2010.
Robert Shiller, the Yale economist and housing bust predictor, says the key metric will involve confidence — specifically question x4 of the survey used in the Michigan Consumer Sentiment Index. The question reads: “Looking ahead, which would you say is more likely — that in the country as a whole we’ll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?”
Shiller says he likes the question because it relates to long-term expectations. “Those expectations are relevant to the kind of essential business decisions that will affect permanent hiring decisions and willingness of businesses to seriously commit to new activities, key factors in lifting us out of the recent economic collapse,” he says. “The question also focuses on the risk of economic depression. Fear of depression seems to have been a major factor in the severity of our recent crisis, and the fear is still often expressed.”
Continue reading ‘Metrics to Watch in 2010: Confidence, Unemployment’
Have emerging markets rallied too far too fast? Mark Mobius says no.
Mobius, the longtime Templeton Asset Management manager, tells BusinessWeek that emerging market stocks are still selling at reasonable values, and that he’s finding good buys in China, Brazil, and a number of smaller emerging and frontier markets. While investors shouldn’t expect the same kind of percentage gains in 2010 as they’ve seen in 2009, he says money is there to be made.
“If you look at the average price-to-book ratio based on the stocks in the MSCI Emerging Markets Index, we are only halfway to the 1997 high,” says Mobius, whose Templeton Emerging Markets Fund is up about 116% this year, far outpacing the MSCI Emerging Markets Index. “The absolute high was three times book, the low was one times book, and now we are at two times book, roughly.”
The emerging-markets rally is being driven by fundamentals, Mobius adds.
Continue reading ‘Emerging Markets Still Offering Opportunities, Mobius Says’
