Over Christmas, I caught a BBC interview program on TV with Hugo Dixon of Breakingviews.com as one of the panelists. He said his best guess is that the next two years will be bad, with weak growth thereafter. He also said that he could easily be wrong -- and that it could be worse.
My gut tells me he's right. But I'm not a top-down guy and my gut feeling and two bucks will buy you a grande coffee at my nearest Starbucks. So there you go.
We're in a bear market and a recession.
The best case going forward is that as more and more so-called experts and talking heads forecast long and drawn out economic devastation -- things pick up unexpectedly (turning conventional wisdom on its head) by the middle of 2009.
But I believe the deleveraging and liquidation that must happen globally won't let the best case happen.
What to do? Well, if you own stocks this is not the time to sell. Unless you sell one name to get a better name at a bargain price. I like to think I did that when selling Mueller Water and Office Depot to get Cheung Kong Holdings at around 70% of book. But I've made plenty of bonehead moves before and there's no guarantee that move will prove profitable.
Yet anyone claiming to be a long term investor will be tested. It takes a strong stomach to ride out bear markets and if this one goes on as long as many fear, the bear will do its best to shake everyone out of stocks and stock mutual funds. Happy New Year.
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