Monday, October 31, 2011

Where Are the Markets Headed?

Predictions for yearend 2012 (unless otherwise noted):

1. UP Standard & Poor’s 500-stock index: 1,428 Current: 1,229

2. UP 10-year Treasury yield: 2.86% Current: 2.14%

3. DOWN Inflation rate: 2.05% Current: 3.9%

4. DOWN Unemployment rate: 8.7% Current: 9.1%

5. UP GDP growth in fourth quarter: 2.5% Second quarter, 2011: 1.3%

6. UP Gold price per ounce on Sept. 30, 2012: $1,835 Current: $1,704

7. UP Value of euro: $1.40 Current: $1.39

8. DOWN S&P/Case-Shiller 20-City Composite Home Price Index: 136.6 Current: 142.8

9. UP Barrel of oil: $95 Current: $92.58

Data: Forecasts are analysts’ consensus compiled by Bloomberg. Current Data as of 10/25

“The best thing an individual investor can do right now is to hold 25 percent of his assets in equities, 25 percent in real estate, 25 percent in gold, and 25 percent in cash. If equities, real estate, or gold drop another 10 percent to 20 percent, put more cash in.” — Marc Faber, founder, Marc Faber Ltd.

“Protect against inflation! While inflation appears tame now, rising government deficit and debt levels combined with aging demographics could reignite inflation in the years ahead. Better to buy inflation protection now.” — Robert Arnott, chairman and founder, Research Affiliates

“Investors should do the same thing now that they should always do: Own a diversified portfolio of low-cost stock index funds and bond index funds, plus cash. If/when a market crashes or soars, they should say ‘thanks for the opportunity’ and rebalance.” — Henry Blodget, CEO and editor-in-chief, Business Insider

“When the world financial markets are in crisis, investors tend to go into cash or safe havens like U.S. Treasuries. This is the worst path. The best way to reduce risk is to ensure your investments are diversified across asset classes domestically and internationally.” — Mark Mobius, executive chairman, Templeton Emerging Markets Group

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