Friday, January 30, 2009

Barron's Roundtable 2009 notes

We offered up some notes on part one of the 2009 Barron's Roundtable earlier this month, and that (as expected) turned out to be a popular feature with readers and new visitors.

Today, as promised, we finish off this year's coverage with the final installments of the 2009 Roundtable. Let's get right to it with a few quick notes on these discussions.

As is my usual custom with the Barron's Roundtable issues, I tried to limit myself to reading only the segments with the investors whose opinions I value. That basically leaves one half to two-thirds of the Roundtable untouched, and that's more than fine with me. I learned long ago that I just don't have the time for other people's nonsense.

If you'd like to evaluate all the panelists' picks, you're more than welcome to. We'll just highlight a few key thoughts from parts two and three here. Let's start off with a few words from Felix Zulauf in part two of the Roundtable issues.

" Zulauf: Last year saw the most severe bear-market decline since 1931. The instant reaction is to be bullish after such a decline, but the situation is more complex. The watershed events of 2007 and '08 lead to a different world in many ways.

The household sector is traumatized by a 20% drop in net worth, as the worst year prior to this saw a loss of just 5%. The corporate sector is traumatized by a slump in earnings, and refinancing problems. Thus, everyone will turn more cautious, not just for 12 months but several years. Deleveraging is a structural process, not a short-term process...

...We are still in a secular bear market that started in 2000 in the industrialized economies. It has several more years to run. This is a transition year after the first slump, and we will see some corrections to the upside."


I doubt this is what most of the panel wanted to hear, but there you go. Zulauf is one of the few Roundtable panelists whose thoughts and investment ideas I've found worthwhile in recent years. Take note of what he has to say.

Now let's jump quickly over to part three, the final installment in this year's Roundtable. You can read the full thing at the link above, but here's an interesting nugget from Marc Faber as a starter.

" Faber: I'm not optimistic about the global economy. The next Madoff case -- the next Ponzi scheme -- is the U.S. government. It will go bust. It is only a question of time. The fascinating thing about asset markets today is that everything is connected -- the dollar, the economy, equity and bond markets, currencies. When one thing moves, so does something else. That makes the market ideal for short-term traders."

Now why do I keep highlighting the bearish outlook? I said I'd try and look more at the bright side of things, but I just can't help thinking there's something to this.

Maybe it's because I've been thinking and reading about these things myself, or maybe it's because I remember the times in the past when Felix Zulauf and Marc Faber were right about things that seemed too crazy for most "serious people" to consider.

Well, a lot of those serious people are having credibility problems these days. Just ask some of the Barron's readers.

Related articles and posts:

1. Overheard at Barron's Roundtable 2009 - Finance Trends Matter.

2. Felix Zulauf - Barron's interview - Finance Trends Matter.