Sunday, November 10, 2013

Watch football...

Here are a few comments, headlines, and quotes, each followed by my response in blue.

A client says: "When the Fed finally begins tapering QE, the stock market's going to sell off in a big way." Maybe, however that's, in my view, too common a sentiment. If "in a big way" means an '08-style rout, it'll take something out of the blue.

Another wants to increase his target allocation to the stock market. I said "would you have that desire if the market were down 20% year to date?"

A behavioral economist says: "This continued growth should last in U.S. markets into late 2015, and early 2016. By then, improved conditions in Western Europe, growing economies in Latin and South America, and continued rebuilding in Asia will reclaim their share of investment interest. However, even the redistribution of investment in other regions by that time won't derail U.S. growth to a significant degree." 
I say: The U.S. will have periods of growth, lasting years at a time, and conditions will improve in other nations as well; I won't, however, offer specific timelines. And I will add---without timelines---that the U.S. and other nations will have periods of contraction as well.

Marc Faber says: "We're in a worse position than in 2008"  I say: At some point Mr. Faber, publisher of the Boom, Doom and Gloom report, will surely be right. I'm just not sure it's today.

Ron Baron says: "in 1999 the stock market was selling for 33 times earnings. Stocks are now selling for around 14 times. They're cheap on stock valuations alone." My math has the S&P closer to 16 times. Still not expensive, in my view, but I'm thinking Baron is sugar-coating just a bit.

Bill Fleckenstein says: "stocks will head a lot lower, and enough lower to make people really unhappy." Of course that's a no-brainer, that's the market. But the timing???? Fleckenstein is a perennial bear, which means the guy's been wrong a lot.

Brian Tracey says: "If you want to be known as a great economist in America, predict growth. If you predict growth you'll be right 70% of the time. And if you're wrong temporarily, you'll be right pretty soon." Yep...

John Templeton said: "There will always be bull markets followed by bear markets followed by bull markets." Undeniable!

I say: Don't guess, diversify, and watch football...





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