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Vancouver, BC (December 29, 2008): It’s time to dust off the crystal ball prognostications for 2009. None are for sure, but here are a few to contemplate:
- The global recession will continue in all corners of the world. Even China can slide into a rough patch. Commodity prices, like oil, will gravitate to lower lows. Hefty corporate losses will continue.
- President elect, Barak Obama will inherit a mess. The expectations of him and his team are beyond reach. His approach will be different. Look for the “Obama bounce” in the markets. Reality will set in when investors realize he can only deliver partially.
- Lower prices and interest rates won’t be sufficient temptation for cashless consumers to loosen their purse strings and incur more debt. Big ticket items, like autos, will struggle heavily. Keep a keen eye on the viability of commercial real estate.
- Governments will spend more taxpayer money they don’t have on additional wasteful workouts, bailouts and other projects. Government deficits will balloon trying to shore up disappearing jobs.
- Get used to shrunken automakers. Before they do, they will ask for more assistance. Nobody should be surprised that the loans they’re getting won’t come back to taxpayer coffers.
- Corporate earnings will soften. The spectre of more layoffs, mortgage defaults, foreclosures and bankruptcies will fuel added turmoil. Weak US financials will continue on the ropes. Finding new capital to replenish their balance sheets will be job one.
- Conventional wisdom has the second half of 2009 getting better, but it may take longer. While stocks seem like screaming buys, cheap doesn’t always equal value. Watch for market rallies that don’t stick. Not everything is a golden opportunity.
- There is always an optimistic side to economics. For instance, housing affordability will continue to improve. At least, that will help first time buyers. Another is more responsible lending practices.
Bottom Line. The economic landscape will keep shrinking. Consumers will hang on to their wallets. Follow what’s best for the personal situation. Don’t jump willy nilly onto hot bandwagons du jour.
Stay simple. Cash will be king. Allocate it slowly and methodically within your well-designed game plan. Make decisions based on fact and reason. Never on emotion.
No investing strategy I know has you making all your moves in one year. So, keep your priorities straight. Remember that your investing is a marathon, not a sprint. Slow and steady gets you there.
Be on the lookout for market sentiment to change one day. I can’t tell when, but until then, tread carefully. Very carefully.
Your comments are welcome.
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