Yesterday, Nagel write in with a question: Are many predicting a recession? Over the past few months, I’ve heard some anecdotal predictions for the stock market in 2007 including the Dow and S&P 500 reaching record levels, a topsy-turvy year, a typical “up” third year of a presidential cycle, a correction, and yes, even a recession.
Nobody can be sure. But US News & World Report develops an annual investing guide each year that looks at the market as a whole and focuses on several sectors. Paul J. Lim presents a number of reasons to be anxious about the upcoming year but goes on to describe the sentiment among economists and analysts is positive and optimistic.
Eight out of 10 money managers polled by the Russell Investment Group predict that stocks will post their fifth consecutive positive year. One in three thinks the equity markets will return around 10 percent or more in 2007…
This optimism is reflected in continued risk-taking among investors, Swanson says. Toward the end of last year, the best-performing segments of the market were the riskiest: emerging-markets stocks, small-company stocks, and commodities… Many on Wall Street think a change is in the air.
Paul Lim has some suggestions for what to watch this year:
* Keep an eye on relative growth overseas.
* Heed the bond market.
* Don’t forget the Fed.
* Check housing prices.
James Pethokoukis from US News also has an opinions on the 2007 outlook: “It seems plausible that the American economy will experience a pleasant mix of growth and price stability.”
Still, as the various economic reports trickle in during the first part of the year, get ready for a bumpy ride at times. “I think we will be struggling to make sense of the data,” [Hartford chief investment strategist Quincy] Krosby says. “Some days it will look like a recession is around the corner and the next that data will defy that conclusion.” So just keep on truckin’, brother. Everything’s going to be copacetic.
From the sound of it, there is a positive outlook for the year, unless you’re Pat Robertson and you believe 2007 will see a mass killing of Americans.
The US News feature continues by looking at six specific areas of the economy, and Consumerism Commentary will take a quick look at what the experts are predicting for 2007.