Friday, March 23, 2007

Market Forecast notes from the field: Austin, TX

Follow the money. Expect the unexpected.

Last evening, I had the privilege of moderating my ninth and final early 2007 Market Forecast event. And the comments and conclusions from my panel – Bartels, Roth, Freeman, and Bovino – reflected many of the same sentiments heard in the previous eight events – and a few new ones. Here are some quick notes from last night’s event:

• Volatility is here to stay (Bartels)
• It’s an aging bull and is showing it (Roth)
• We have entered a new leg of the bull (Bartels)
• US growth will slow but pick up in 2H07 (Bovino)
• Long-term Bonds are the most overpriced asset class (Freeman and Roth)
• Forget Large cap, the Smids remain the place to be (Bartels and Roth)
• Liquidity is abundant and a key driver to the markets (Bartels, Roth, and Freeman)
• Correlated market moves are a problem for alpha production (Freeman and Bartels)

Investment Strategy Implications

Areas of disagreement were heard and many insights were shared. However, the expression “The more things change, the more they remain the same” seems to apply, particularly in the areas of liquidity and unknown risks (credit derivatives, for example). This is to be expected, despite major and minor market moves. But, new and integrated thinking was also part of last night's event. For example:

• Market moves will tend to remain synchronized (and perhaps highly correlated)
• Most of the action by hedge funds is market following
• Hedge fund behavior is a reliable contrary indicator
• Sudden and largely unpredictable sharp market corrections are now the norm.

It will be most interesting to see just how much changes and how much remains the same at my next Market Forecast events in May (MTA) and August (NYSSA).

Note: I will be on CNBC Morning Call on Monday (March 26) around 10 AM. Hope you get a chance to catch the segment.

Have a good weekend.

1 comment:

andrew6 said...

Thanks for the quick report. Smids,mmmmm, that's new. Happy trails, Andrew