2010 Forecasts

The Pragmatic Capitalist has aggregated the large institutional forecasts for 2010. Simply follow the links.

http://pragcap.com/the-ultimate-guide-to-2010-investment-predictions-and-outlooks

8 Resolutions!!

Credit goes to Gurufocus for this wonderful interview with money manager Jonathan Hirtle. Hirtle published 8 resolutions which provides a framework for investors.


1. I will remember that there is no free lunch. Stock market investing provides returns that are higher than returns from bonds and cash equivalents, because stocks are almost always more risky than bonds and cash equivalents. Periodically that risk is revealed through dislocation. That dislocation is the price I pay for higher returns. I will not commit more assets to stocks and stock-like investments, than I can tolerate during the next dislocation.

2. I will always be skeptical – but never cynical. Skepticism is healthy. Cynicism is not. Doomsday pessimism is just the mirror image of pie-in-the-sky optimism and both are highly unlikely. I will make prudent investment decisions based on likely, not unlikely, outcomes.

3. I will conduct my own due diligence. I will not invest because a friend has, or because recent returns have been high. Most of the best investment strategies in the world are based on common sense. If I can’t understand the investment process, I will not invest.

4. I will stay diversified. No matter how compelling an investment or an investment strategy sounds, I will only believe a little bit. Wealth is created and lost through concentration, and I dare not concentrate in a business or investment where I possess knowledge that is anything short of mastery.

5. I will think of risk in total. That means my operating risk and financial risk, as well as investment risk. Only families and organizations with strong, reliable cash flows and low debt levels can afford to pursue extraordinary returns through a risky investment strategy.

6. I will value my investment portfolio infrequently. Monthly at most. Quarterly is better. Daily valuation aggravates a false sense of gyrating value. Daily pricing has to do with supply and demand – not value. Value is created over long periods of time – a business cycle. I will match my investment horizon to the time it takes to drill new wells, develop new drugs and capture more market share – years, not days or months – and the longer, the better. Successful investing requires careful decisions driven by valuation and process, as well as the discipline to let that process work.

7. I will always care about price. There is no asset that is attractive at any price and there is almost no asset that is not attractive at some price. Price always matters. Price is the trump card. As price increases, risk often increases, so I will use quarterly cash flows to rebalance incrementally.

8. I will never forget the difference between investing and speculating. No matter how many times I hear it on television, I will remember that there is no such thing as a “speculative investor” or even a “short term investor.” Equating investing with speculating is like equating work with gambling. Speculating is not investing. Trading is not investing. Investing is investing. It is solely about acquiring future cash flows at an attractive price – period. If I do not know what price is attractive or if I know that an asset is overpriced, but I expect it to become even more overpriced, then I am speculating, not investing. While I can sometimes make money speculating, its outcome is far more random than that of investing.

1 YR/3YR Forward Looking Projections with Timing Signals December 09

I. Commodities:		1 Yr.	3 Yr.	Signal
	All Commodities	15.0%	24.5%	Bull
	Oil	18.0%	34.0%	Bull
	Natural Gas	27.0%	43.0%	Bear
	Grains	6.2%	16.8%	Bull
	Industrial Metals	10.1%	21.8%	Bull
	Gold	-13.2%	-4.4%	Bull
	Silver	-0.9%	13.3%	Bull
II. Fixed Income
	US Treasuries	-3.2%	0.6%	Bull
	Treasury Inflation Protected	-1.4%	2.8%	Bull
	Corporate Preferreds	2.4%	6.8%	Bull
	Corporate Bonds	-2.2%	1.4%	Bull
	High Yield Corporate Bonds	2.3%	8.6%	Bull
	Global Bonds	-5.5%	3.5%	Bull
	Emerging Market Bonds	-5.0%	6.8%	Bull
III. Global Stocks
	Global Stocks Ex- US	12.6%	22.8%	Bull
	Emerging Markets	2.7%	15.7%	Bull
IV. US Stocks
	All US Stocks	12.2%	20.6%	Bull
	Dow Jones Industirals	9.3%	17.0%	Bull
	Dow Jones Transports	12.1%	22.6%	Bull
	SP 500	12.4%	20.6%	Bull
	Nasdaq Composite	6.8%	16.5%	Bull
	Russell 2000	15.6%	25.4%	Bull
V. Special Opportunities
	US Real Estate	27.8%	43.8%	Bull
	International Real Estate	26.0%	38.0%	Bull

This is Pretty Darn Good

I am not a big fan of the general mainstream "Business Magazines", however, this is pretty darn good. In fact it is excellent.

Stocks: Five Market Mistakes to Avoid - BusinessWeek

Mario Tama/Getty Images

By Ben Steverman

Markets may have rebounded in 2009, but individual investors are still edgy and shell-shocked.

Even as the broad Standard & Poor's 500-stock index remained up 56% since March, the U.S. unemployment rate crept above 10%, according to a Labor Dept. report released Nov. 6. "I don't think many people are feeling very relieved," says Milo Benningfield of Benningfield Financial Advisors in San Francisco. Many people believe the "[stock market rally] can't last," he says.

These remain risky times, and the last few years have demonstrated to investors the high cost of doing the wrong thing. Against that nervous backdrop, BusinessWeek asked financial advisers what common mistakes investors are making, and how to avoid them:

1. Don't Jump In All at Once
A little optimism can be a dangerous thing. Individual investors are notorious for selling stocks when markets have already dropped and buying after they have risen. And, says Susan Elser of Elser Financial Planning in Indianapolis, "Selling low and buying high is the worst thing you can do for your returns."

Among those who stayed away from stocks and other risky investments for the past year, many are irked to have missed out on the recent rally. But is now the right time to buy again?

Don't rush back into the market because you worry you've missed the rally. "The biggest mistake is [to try] to make everything up at once," says Micah Porter, president of the Minerva Planning Group in Atlanta.

At these levels, a 10%, 15%, or 20% correction in the stock market is entirely possible at almost any time. So, instead of buying all at once, Porter advises buying stocks gradually over the next year—or, if you have a lot to invest, an even longer time frame. That puts you in the market long-term, but minimizes the chances you'll buy at the market's exact peak.

2. Don't Fall for Fads or Hype
In investing, jumping on the bandwagon is often a bad idea.

For example, television ads have appeared touting gold as an investment after the precious metal's price has jumped higher, approaching $1,100 per ounce on Nov. 6.

Yet this could be the very time when gold prices are at or near their peak. "This is probably the worst time in my opinion to pile into gold," Benningfield says. He also warns against currency speculation, another recent fad. "It's really risky," he says.

Along with other commodities, gold can be a valuable part of investment portfolios. But advisers like Steve Medland of TABR Capital Management in Orange, Calif., suggest keeping gold to less than 5% of your holdings.

Lots of marketing dollars are also pushing equity-indexed annuities these days. "It is the hot product of the day," Elser says. But Elser, Medland, and others warn about the complexity and high fees of these annuities.

3. Don't Use Headlines or Politics as Investing Guides
"Making [an investing] decision based on who is in political office, whether you agree or disagree, is a huge mistake," says Elaine Scoggins, client experience director at Merriman, a Seattle-based investment advisory firm.

Since the election of Barack Obama as President, political temperatures on the right have risen (just as tempers rose among liberals during the last Administration). And that could be leading to bad investing decisions.

Based on their political beliefs, people are buying into disaster scenarios, from high inflation to a crash for the U.S. dollar to skyrocketing tax rates, Scoggins says. "There are a lot of scare tactics in the media and in politics."

Betting your portfolio on these unlikely outcomes can be a big mistake.

"There's incredible fear out there," says Paul Sutherland, chief investment officer at FIM Group in Traverse City, Mich. But not all the fear is warranted. For example, he notes, a weaker dollar actually can help U.S. manufacturing or U.S. firms with overseas profits.