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BlackRock's Crystal Ball into 2010 and the Next Decade
By Economic Forecasts & Opinions
BlackRock, Inc. (BLK) Vice Chairman Bob Doll has been putting out annual predictions for 15 years. Doll, who helps oversee about $3.2 trillion at BlackRock, the world’s biggest asset manager, just released his ten predictions for 2010 and for the next ten year. Eleven of the twelve predictions he made for 2009 were right. Below are Highlights of his latest market forecasts.
In general, Doll believes U.S. stocks will outperform cash, Treasuries and other developed economies with S&P 500 rallying another 12% this year reaching 1250 from their Jan. 4 open of 1116.56.
The U.S. is on its way to recovery, but the economy will grow slower than that of a typical recovery mainly due to heavy debt load. Inflation will be a “non-issue” in the U.S., Europe and Japan this year even with rising prices of gold and oil. Dollar will likely remain weak in broad trading range with Euro and Yen.
Doll also noted structural issues in the economy would continue to present problems. Chief among them are
"ongoing consumer deleveraging; a banking system facing deteriorating loan quality and an increasing yet uncertain regulatory environment; securitizations markets still largely shuttered, and a real estate market that may still be healing for several years.”
Emerging-market stocks and economies will outperform the developed world this year. His "favorite secular story in the emerging markets remains Brazil." (Note: Barclays Capital recently warned of a possible Bovespa (BVSP) correction in Q1 or Q2 this year based on technical chart analysis).
Furthermore, he advised investors should prepare for rising taxes following health- care reform and protectionist government policies if the unemployment rate remains high.
Doll favors healthcare (especially managed care and healthcare services), information technology and telecommunications sectors. However, he advised underweight on financials as they are likely to continue to underperform.
Note: Doll’s predictions differ from that of Blackstone Group LP’s Byron Wien’s. Wien's ten predictions for the new year call for the S&P 500 to finish year 2010 flat, U.S. GDP to expand about 5% and financials to outperform the market.
Doll's Predictions for 2010
- U.S. economy grows above 3% outpacing the developed world
- Unemployment to remain high, but with positive job growth
- Earnings rise significantly - 20-30% on cost & productivity advantage particularly from a weak dollar.
- Inflation a non-issue for the developed countries, but oil and gold will still go up
- Interest rate rises on treasury curve - 10-year treasury targets 4.5%
- Stock outperform cash and treasury - S&P 500, should rally another 12%
- Emerging markets outperform
- Health care, IT & Telecom outperform
- More M&As
- Dems stay in control of the Congress
Doll's predictions for the next 10 years:
- US equities experience high single digit percentage total returns, in the range of 6% to 8% annually, after the worst decade since the 1930s.
- Recessions occur more frequently during this decade, rather than only once a decade as occurred in the last 20 years.
- Healthcare, information technology, and energy alternatives are leading growth areas for the United States.
- The US dollar continues to become less dominant as the decade progresses.
- Interest rates move irregularly higher in the developed world.
- Country self-interest leads to more trade and political conflicts.
- An aging and declining population gives Europe some of Japan’s problems.
- World growth is led by emerging market consumers.
- Emerging markets weighting in global indices rises by 10 percentage points.
- China’s economic and political ascent continues.
Doll's Advise to Investors
- Look for quality in all styles and caps.
- Focus on better-positioned sectors - IT, healthcare and telecommunications are his favorite sectors.
- Think about geography - Emerging markets, Brazil, in particular.
- Gains will be harder to come by - Ongoing volatility and selectivity will be critical.
Here is the video where Doll appeared at CNBC on Jan. 6 discussing his latest predictions. His full commentary is available at BlackRock web site here.
Video Source: CNBC
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Bob Doll = male version of Abby Joseph Cohen.
He is just like any other fund manager whose job is to keep his assets growing, i.e., getting new suckers in, until the ponzi scheme unwinds. He was fun to watch in 2008 when he was pumping stocks all the way down. Of course he will do that again when we go to new lows again. THAT is his job so he is only useful in a contrarian's equation.
He's not even useful as a contrarian, because he's ALWAYS bullish.
lol... Except that he's prettier!
"Eleven of the twelve predictions he made for 2009 were right."
I just went 16 for 16 against the spread in NFL Week 17.....
I won the annual office football pool! Made $350 against $35. Best investment I made all of last year!
Here's what to do...take all of them, put them in a blender and swish, bassomatic them, pour it out in a glass and let it sit. Predictions are a mugs game.
BlackRock, Inc. (BLK) Vice Chairman Bob Doll has been putting out annual predictions for 15 years.
So, whats his 15 yr record?
Having had his outlook pounded into us while at Merrill, best I recall is he's excellent in bull markets and mediocre at best in bears. Sorta like us all.....
i think it hysterical that Doll says nothing about housing and cre.
very telling indeed.
He also didnt mention he was going to default on a mortgage payment for Stuyvesent either. Otherwise, all is well.. What a putz.
Exactly. Also not a word about sovereign defaults, Fed's increasing problems, death of the U.S. middle class, banks staying insolvent and many, many others.
Doll is a perma-bull who gets paid according to AUM. Take a look at his "no recession" and "bull market" predictions for stocks in 2008:
http://www2.blackrock.com/content/groups/global/documents/literature/bob...
The thing about these tools and their predictions is that they're wrong at the worst possible times:
Ten Predictions for 2008
2. The United States narrowly escapes an economic recession, but experiences a profits
recession.
5. Stocks achieve a new all-time high in 2008 as price/earnings ratios improve.
Yep. Looks take a look at what the Golden Jackass says about the whole picture:
http://www.financialsense.com/fsu/editorials/willie/2010/0106.html
I always prefer sensationalism over boredom these days anyway.
I read Jim Willie CB as well.
In fact, I find that reading the more extreme pieces gives me more insight than the more mainstream ones. The more extreme the better! Not that they are typically right (though Jim Willie's record is pretty good), but they are more thought provoking.