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Investment Outlook for 2008

Investment Outlook for 2008

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Investment Outlook for 2008

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  1. Investment Outlook for 2008

  2. Whether we have a recession or not, it will certainly feel like one.

  3. The credit crisis is not over.

  4. Expect housing prices to continue to decline, probably another 10 to 15%.

  5. The US stock market will be even more volatile than in 2007.

  6. Some of the emerging markets will continue to perform better than the developed markets.

  7. Still don’t see the Japanese market outperforming

  8. What will strengthen the dollar?

  9. Some suggestions: • Positive on China, Brazil, India and Korean equities but with quality companies and don’t expect a smooth ride • US stocks with high international revenue streams • Like most minerals, especially oil and coal • Gold will continue to shine • Quality US bonds • Avoid the monolines, unless they only insure municipals • The Euro should hold up for most of the year • Avoid hedge funds until the credit market has flushed out the toxic waste

  10. Is the credit cycle important?

  11. Stagflation is here, and it will be for more than two quarters

  12. House prices are in for further decline, possibly double the decline in 2007.

  13. The commercial real estate market is in for an extended downturn.

  14. Large financial institutions have already suffered massive losses and they have a lot more to consider.

  15. Next we will see regional and smaller banks forced to reevaluate their portfolios and this will result in some insolvencies.

  16. Corporate defaults will accelerate as the property markets struggle. One needs to include the impact of the monolines in this scenario.

  17. The above will force financial institutions to further curtail their activities which will seriously cutback on corporate lending, lending to hedge funds and restrict liquidity in general as the financial system regroups to protect their own liquidity position.

  18. Will the strength of the rest of the world’s economy be able to off-set the above? This will be the question – Is the rest of the world capable of underpinning our economy!

  19. So far, we haven’t even mentioned SIVs, CDOs, credit swaps and credit derivatives. As these shake out, the result will be further credit contraction.

  20. Can you imagine how any of the above will support the dollar?