The big comeback should already be here, according to Wall Street pundits. It was due to arrive in the fourth quarter… a 50 percent increase in earnings led by – of all sectors – banks.
Back in 1999, I traveled to Moscow with a group of powerful business people and government officials. The most powerful of them all was Sandy Weill, CEO of Citi at the time.
The economy is now staring eyeball-to-eyeball with an activist U.S. government. It will legislate, reform, supervise, bully, give out money like cotton candy and get concessions in return.
Two years ago, I talked to a Canadian bank and they swore to me that the subprime crisis which was surfacing in the U.S. at the time wouldn’t touch them. The bank’s shares have since fallen 40 percent. You can run but you can’t hide.
Goosing infrastructure companies isn’t anything new. It’s been going on since 2003, when the U.S.’ “shock and awe” offensive overwhelmed Iraqi forces and resulted in negligible casualties. It was too easy. The casualties came later.
The U.S. market peaked in October 2007. Of the dozens of predictions I’ve read, the consensus is that the economy will turn around in the second half of the year. The market, as a forward-looking mechanism, should rebound 1-2 quarters prior.
T. Boone Pickens thought oil was going to hit $150 last year and go up from there. I don’t mean to pick on him. He’s worth about $3 billion. He’s earned his stripes. I have nothing but respect for the man.
Pickens wasn’t the only person who got 2008 wrong. There were plenty of others.
When it comes down to it, anybody can make predictions. It’s not very hard. But it is hard to make ones that do what they purport to do: predict.
My advice is to take them with a grain of salt. If predicting the markets were so easy to do, most of Wall Street’s brightest fund managers wouldn’t have lost 40 percent or more last year.
I’ve made my share…
Last year, the illusion of permanent wealth and prosperity was shattered. Just as The Great Depression followed the ‘roaring’ 20s, so we now face a huge correction to years of unrestricted gains. But take the historical parallels further, and Andrew Gordon says this year could be your best chance in decades to secure your financial future.
Hello 2009. What do you have in store for us? Will you finally put the immense problems of the economy behind you? What surprises are you going to spring on us?
The mad rush to US Treasuries has driven yields down to measly levels. But Andrew Gordon says investors can find much better returns with Master Limited Partnerships (MLPs). Better still, large-cap pipeline MLPs get their revenues from fees, and so are less exposed to wild swings in oil and gas prices.