The markets and exchange traded funds (ETFs) have made a pretty swift rebound and investors are still waiting to recover all their lost wealth. However, the experts have varying opinions on the likely outcome of the markets.
The S&P 500 has gained more than 60% since the March 9 low, which has many in the markets feeling optimistic. But despite the steady gains made since that low point, skeptics still abound. Even more investment professionals have mixed beliefs on whether the average investor will recover all of his or her wealth any time soon, writes Jeff Sommer for The New York Times.
- Doug Ramsey, research director of the Leuthold Group in Minneapolis, thinks the S&P will jump another 20% in the short-term, but stocks may drop once prices outstrip earnings.
- Laszlo Birinyi Jr., president of Birinyi Associates, optimistically believes in a good long-term trend, pointing to a strong economy and increasing corporate earnings. Birinyi recommends looking into developed foreign markets since overall valuations are cheaper than in the United States.
- Byron R. Wien, a Wall Street veteran and vice chairman of the Blackstone Group, says the fundamentals are sound, with a recovering economy, improving credit market and a rebound in earnings. Still, Wien sees that a short-term correction “wouldn’t be unexpected now” and it could even be a “healthy thing.”
- Barry Knapp, United States equity strategist at Barclays Capital, predicts that the S&P will take a roller coaster ride and end up at around current levels by the end of 2010. Knapp suggests taking up more “defensive” stocks to hedge against short-term risk. [6 Defensive ETF plays.]
Equity weightings in private clients’ portfolios will likely remain higher than bonds, indicating a sign of faith in global growth, writes Genevieve Cua for AsiaOne. Strategists remain pessimistic about fixed-income assets, expecting an eventual rise in interest rates.
In general, observers see that prospects are better in the emerging markets, volatility and uncertainty will follow the shape and timing of Central Banks’ exit strategies, and investors should be prepared to make tactical shifts in their portfolios. Deutsche Bank Private Wealth Management lead strategist Christian Nolting suggests reducing bond exposure for more riskier assets and alternative investments.
Whatever happens in the markets, this is a good reminder to always, always have a strategy in place. This way, you’re prepared and ready to take action regardless of what happens.
We follow the trend lines by using the 200-day moving average. This allows us to look for, identify and take part in any potential long-term uptrend, while a stop loss has us out when the trend has ended or stalled. Having a set buy and sell signal in place (and putting it to use) will help you remove your emotions, put a cap on your potential losses and help you reach your goals in 2010 and beyond. [Following the trend.]
For more information on trend following, visit our trend following category. More on trend following can be found in The ETF Trend Following Playbook.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.