Pessimism ruled as Thanksgiving came. Forecasters were busy making me nuts late last week. I’m thankful for the clarity some rest gave and hope to shed some light on all the nutty forecasts for you.
Nuts & Forecasts
Pessimism Is Not A Plan
The media is full of forecasts issued by financial gurus of one type or another. Many are pessimistic. Many are not. I think you know where I stand especially on the equity side. I am optimistic.
Guess what? The “Dr. Dooms” seem to agree with me.
Money magazine’s December 2011 issue shares a few forecasts from four of these pessimistic experts. Let’s take a quick look at what they had to say:
Mr. Nouriel Roubini – states that there is a decent chance for another recession and that he favors U.S. stocks over other asset classes.
Mr. Marc Faber – believes that China will bring harm to global economy with their own collapse and recommends that investors hold 25% of their portfolios in stock.
Mr. Henry Kaufman – predicts stagnation of U.S. economy and recommends the purchase of stock in firms with strong balance sheets.
And . . . Then there was one nut worth cracking:
Mr. Richard Sylla – “Expect better returns over the next decade. Shift from cash to stocks in stages, putting a quarter in every few months.”
The last one uses a mathematical approach to investing known as dollar cost averaging*. Mr. Sylla also seems to be rather common sensical (chances are very good that the next decade will be better than the last).
My chin is up, my eyes are forward, and I’m trying to avoid too many nuts this holiday season.
Until next week,
~Susan R. Linkous
Dollar cost averaging involves continuous investing in securities regardless of fluctuation. Investors should consider ability to continually buy while prices fluctuate. Always remember that stock investing involves risk including loss of principal.