There is a growing chorus among mainstream financial reporters and the corresponding ‘experts’ they trot out every 15 minutes. That almost all of these people are singing from the same songbook is definitely a cause for concern. They’re all saying 2009 is going to be year you won’t want to miss for stocks. You need to buy, buy hard, buy often, and most importantly, buy now.
Buyer beware
Conventional wisdom with regards to investing is that you don’t buy until there is blood in the streets. It is amazing the everyday folks that are now repeating that phrase to me in during the course of recent advisory sessions. Granted, a 45% decline in most major indices might qualify as blood in the streets, but is it over?
At best America is headed into a period where there is going to be little or no growth for the next 3-5 years. This assumes that the Fed and the rest can keep things held together with printed money (after all, that’s what they do and the printing press is their only tool). This is a pretty weighty assumption, but even if this is the case, there is going to be little support for higher stock prices in 2009. Let me float something else out there. Since the assumption by the media and the ‘experts’ so far is that the recession is near conclusion, wouldn’t it make sense that we’re going to see another down leg in stocks once everyone figures out this recession isn’t going away so quickly, and is in fact, getting worse? Some food for thought before you go and pull the trigger and put whatever you’ve got left after this year’s shellacking back into the markets.
Keep in mind also how many of the ‘experts’ make money. They make it on commissions. If you’re on the sidelines protecting yourself, they don’t make money. The commission-based folks are easy to spot – to them it is always time to buy into stocks. They were buying in November 2007, they were buying last summer, and they were buying this past fall. It will likely take their clients years to recover.
Our weekly radio show “Beat the Street” is in the process of doing a 2 part series on how to choose and assess financial professionals. We give you the questions you need to ask these folks, and tell you what red flags to look for in your dealings with them. The first part of the series is posted at CIC, and can be found by clicking the link below
Beat the Street – Is your advisor up to the Task? – Part 1
I would like to personally wish everyone a joyous Christmas and holiday season and the best for 2009 and remind everyone that our Centsible Investor subscription specials end on 12/31/08. Take advantage and lock in our low introductory rate today by clicking below: