I saw this guy from First Pacific Advisors on the Bloomberg this morning. Yes, I know, we're not supposed to listen to these guys. I just watch bloomberg if I wake up early cuz it puts me back to sleep.
This guy (for a change) sounded like he knew what he was talking about.
http://www.fpafunds.com/news_040423_case_for_cash.asp
The upshot was that their analysts see stocks as slightly overvalued against current earnings, and that current earnings are ramming their upper limits. Nowhere to go but down, and stocks with them.
Bond returns stink and they dont see the 10+ year yield curve topping 5% until ~5 years from now. Their bond holdings in the funds I looked at were low single digit %. They dont see any value in putting currency at risk against todays bond market.
Their team has looked into inflation and believes the CPI to be 1 to 1.5% below actual inflation.
Before inflation, at stocks to return 4-5% over the next 5 years...losing ground to their measure of inflation.
So their plan is to sit out a portion of their positions in cash and wait for the drops in stocks and bonds.
Another good read for a learning investor, investing discipline:
http://www.fpafunds.com/news_040223_..._investing.asp
Favorite quote: "How wonderful it is to be in a business where, when something goes on sale, most everyone runs away. It is fantastic because it creates investment opportunities for those who are disciplined, patient and decisive."
Of course, these guys are the very people we usually advise to avoid...5.25% front load and .83% annual on their fund...
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Many an optimist has become rich by buying out a pessimist
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