Wednesday, December 31, 2008

Happy New Year

“The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.” Warren Buffett
What's your outlook for stocks in 2009? I think it depends on what everybody else's outlook is - what is already priced in.

U.S. stocks are down by more than a third. Earnings have been very weak and 2009 estimates have come down a lot. The dollar is finishing up its worst year vs. the yen since 1987. Global investors have priced in U.S. economic weakness in spades. A Russian professor is predicting the end of the USA and nobody is particularly shocked.

It's impossible to know whether 09 can be less bad than real expectations unless you know what expectations are, which is kind of circular but necessary analysis. There's no need to rush into anything.

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