Forbes Article: Hold Cash, Sell Stocks
By Vahan Janjigian - I had an interesting lunch today with Kurt Schacht of the CFA Institute and Ravenel Curry of Eagle Capital Management. In February, the three of us traveled to Abu Dhabi and Dubai to lecture to the Abu Dhabi Investment Authority, Mubadala, and the CFA Institute's local chapter in Dubai. Today's lunch was an opportunity to catch up on that trip and learn about some new initiatives. Kurt is headed back to the U.A.E. in two weeks. This time he is taking Tom Keene of Bloomberg fame and Jason Trennert of Strategas Research Partners.
During lunch, we discussed the markets and economy. Both Ravenel and I remain skeptical of the recent rally. In my view, there is a good chance we will see a double-dip recession with the second phase coming in the first or second quarter of 2010. Government stimulus appears to have brought us out of the first recession, but I doubt the gains will last. I talk a little about this in my column in an upcoming issue of Forbes magazine. In the meantime, you can read my views on the market and the views of several others as recently published in Hold Cash, Sell Stocks.
During lunch, we discussed the markets and economy. Both Ravenel and I remain skeptical of the recent rally. In my view, there is a good chance we will see a double-dip recession with the second phase coming in the first or second quarter of 2010. Government stimulus appears to have brought us out of the first recession, but I doubt the gains will last. I talk a little about this in my column in an upcoming issue of Forbes magazine. In the meantime, you can read my views on the market and the views of several others as recently published in Hold Cash, Sell Stocks.
posted by Vahan Janjigian | 4:57 PM
3 Comments:
I'm still awaiting the "retesting of market lows" you forecast months ago. You've taught me that no one has any idea what the economy or markets will do.
By definition, a forecast is an opinion and I am the first to recognize that I could be wrong. However, just because something hasn't happened yet does not mean it won't happen. For example, in December 1998 I predicted a sell-off in stocks, but the sell-off did not begin until March 2000. In January 2004, I predicted a bubble in housing prices, but housing prices did not peak until 2006. Yet in both cases, prices fell to levels below where they were when I made those forecasts.
I forced my wife to move all of her 401k money into an all treasury money market fund a full 2 years before the financial crisis hit. It was getting a bit uncomfortable around here as she would tell me the quarterly returns of the other funds... Finally, when stocks plunged 12 years of gains on the S&P were wiped out in a matter of months... Creating and chasing bubbles has become a favorite American pastime and no one ever seems to learn even from recent history. How is it that "this time is different" holds more sway than the repeated examples that it is not... Vahan, you will be right. Too bad that so many people would rather chase short term gains than protect what they have. Everyone thinks that they will be the one who can ride the bubble to the top, then get out unscathed when things collapse...
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