The gurus were out in force in recent weeks to predict how the market would develop for the rest of the year.
Up, down, and sideways
John Paulson, who is said to have made a personal profit of $5 billion last year, was bullish on prospects for the U.S.:
"We believe the U.S. economy is recovering, and we anticipate continued growth."
Yale economist Professor Robert Shiller, who devised the S&P/Case-Shiller house price indices, took a different view when he spoke with CNBC in Davos. While not saying that the market would fall, he commented:
"I would say the market is overpriced, based on fundamentals. … I'm talking about the U.S. and, I suppose, Europe."
Steering a path between the two, Ken Fisher announced in his Forbes column:
"In 2011 I expect the market to go sideways. There will be widening return dispersion around the averages by category and by stock. This is what financial types call 'alpha'. In layman's terms it is the amount of return you can get from a stock's inherent value determined by things like earnings growth. This is the year to bet correctly, to be a stock picker extraordinaire."
Do as I say, not as I do
Those differing opinions are what make a market, and add to the ongoing debate about passive versus active fund management. Tom Stabile, writing in The Financial Times, recounted a story that will come as little surprise to seasoned readers of The Motley Fool:
"Just this season, I twice again enjoyed chats over holiday cheer with asset management and due diligence specialists -- folks who pick active managers, or market such investments -- where they confided how they invest most of their own money passively."
Continuing to bang the drum for commodities, Jim Rogers had an interesting insight on profiting from the world's need for water:
"I would not suggest you own water, because if you own water, when things get really bad, the politicians will sneer and say, 'You filthy horrible capitalist, you are making money off people's God-given right to water.' And if you are lucky, they will hang you in the city square. But if you can solve the water problems, they will build a monument to you in the city square and you will be extremely rich."
On commodities in general, his former partner George Soros thinks the bubble will continue to inflate:
"Commodities are traditionally very, very cyclical, so it's a matter of where are you in the cycle. I think you are pretty advanced. We have had now a decade of commodity boom and a number of new investments are maturing but not yet at the production stage so I would say a couple of years."
And as Ireland faces a general election, Soros also expressed the view that the European debt crisis is not yet over:
"You already have Ireland … where they are going to renege on that [IMF bailout] agreement because it's very unjust, so the debt of the banks will have to be carried by the bond-holders, and that is going to hit the banks that own them, the German and French banks, and very interestingly the European Central Bank … In the long run, [the political commitment to preserve the euro] could inflict such hardship on the debtor countries ... that it may lead to the political disintegration of Europe."
Obligatory Hugh Hendry section
The always colorful Hugh Hendry, writing in The Financial Times, also sees problems ahead for Ireland and the euro:
"Ireland is indicative of the social pain. ... The country itself is only held together by the premise that the economy will grow by 2.75% a year for the next four years. Dream on."
Following the bankruptcy of one of Ireland's leading bankers, an old BMW he owned was repossessed and scrapped last month, but in an inspired move the recyclers auctioned the right to press the button on the crusher. The ad on eBay read:
"The highest bidder will win the opportunity to ... push a button and crush the car. All money raised will go to The Samaritans. Play your part in history."
There were 30 bidders, with the winner paying 3,150 euros for the privilege.
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