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No more gloom and doom

BY Dave Ross  on December 28, 2012 @ 9:55 am (Updated: 10:17 am - 12/28/12 )

AP: 69880bc0-429e-447c-a070-dbdec80f7437
The stock market may jump around, but you don't have to be an investment genius to get five percent, maybe even six or seven percent. (AP Photo/Richard Drew)
I will not wallow in this gloom and doom talk. I always look for something to be optimistic about, and there it was this morning on CNBC.

"Our next guest thinks that you can make 20 percent on the American stock market this year," announced the cable news network host.

Now THAT's a hell of a tease. How can you not pay attention? The prediction comes from Jim Paulsen of Wells Capital Management, who is considered consistently bullish.

"I'm thinking 15 to 20 percent returns and I think it's mainly about confidence.

His argument is that people like you and me who believe in saving for the future, are beginning to realize that putting your money in a bank where you interest rate is what - one percent? - is about as profitable as watching dust collect. And it's not going to change.

The stock market may jump around, but you don't have to be an investment genius to get five percent, maybe even six or seven percent. When people begin to accept that as the new normal maybe it'll snowball.

"I think in couple weeks we're going to have some progress made on fiscal issues," continued Paulsen. "Bank lending is going up - and that's the type of thing that gives you the sense of a sustainable recovery going forward."

Of course you might ask, why believe this guy, he IS one of those analysts who in 2008 predicted the recession wouldn't be so bad. But stocks did recover from that, and it's fun to dream.

The other thing I like is that 2013 is the first year in a long time with no end of the world predictions pending. Except for the fact that it ends in 13. But I choose to ignore that.

Dave Ross, KIRO Radio Talk Show Host
Dave Ross is co-host of The Ross & Burbank Show on KIRO Radio (weekdays 9-Noon) and never too far from the spotlight.
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  • Chuck Gould wrote...
    Whatever the common man's money chases will ultimately collapse
    December 28, 2012 9:54 am
    The stock market guru is quite correct. Interest rates at the bank are essentially zero, while inflation continues at no less than several percent per year. Yeah, you can expect better returns with your money in the stock market that sitting in the bank, for at least a while.

    One advantage of money in the bank is that deposits are insured against loss. (Unless the entire government fails, and then stocks aren't going to be worth diddly, either). Those stock market returns carry a risk of loss, and too many people think that putting money into the Wall Street Casino is almost the same as putting it in the bank. The time to buy into the stock market was back at 7,000; not at 13,000.

    Just like "can't lose" dot.com stocks of 10-15 years ago and "can't lose" real estate deals of more recent memory, it's almost a certainty that far too much money will be chasing stocks. Overvalued is overvalued. The inevitable corrections can be painful.

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  • soo purletiv wrote...
    @ Chuck Gould
    December 28, 2012 11:26 am
    ..."The time to buy into the stock market was back at 7,000; not at 13,000."...

    True, but even in a bear market, or when the market is at a zenith of sorts, and nearing a correction, you can still find bull stocks that grow even in down times if you look hard enough and ignore the rhetoric of the supposed experts.

    But yes, they do in time all collapse, but we have to live in the moment. The world as we know it will end. But we can't hide in a cave waiting for it to happen.

    If a person has money to sit in a savings, and they want low risk, at least put it in a 5 or 10 year CD or some sort of retirement fund and leave it there. You can also buy bonds. If you are able, take a portion you are comfortable losing (worst case scenario) and invest in higher risk higher return potential stocks and funds. If you lose it, or a portion of it, no big deal. But if you get the returns, bingo, the risk was worth it. If not, you still have the money you kept safe in the banks.

    Invest, invest, invest!

    Disclaimer: This post does not guarantee future gains of any kind. The risk of losing your investment, including your principal is real. Contact a qualified investment advisor before risking funds. They are the "experts"... ;-)

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  • ron prevost wrote...
    How's the Facebook stock doing, Dave ?
    December 28, 2012 7:02 pm
    And YOU should be talking about the stock market? Heck, you'd have better luck talking to Luke about a roulette wheel.

    But, if you've given up worry, try to parody that song from a few years ago : Don't Worry, Be Happy.

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