SOS Gary Shillings 2010 Predictions

(B)efore you start gambling again, please listen to Gary Shilling. For over three decades he's been rated one of America's top economic forecasters by Institutional Investor, Futures, the Wall Street Journal and others. Shilling's been a regular Forbes columnist since 1983, respected for his contrarian views, usually on target.

So let's cut-to-the-chase: Here are his latest: 17 Picks = 6 Buys + 11 Sells.

The good news: Six buys for 2010

1. Buy treasury bonds.


2. Buy income-producing securities.


3. Buy consumer staples and foods.


4. Buy 'small luxuries.'


5. Buy the U. S. dollar.


6. Buy eurodollar futures.

Now the bad news: 11 sells for 2010

1. Sell U.S. stocks in general.


2. Sell home-builder and selected related stocks.


3. Sell big-ticket consumer discretionary equities.


4. Sell banks & other financial institutions.


5. Sell consumer lenders' stocks.


6. Sell many low- and old-tech capital-equipment producers.


7. If you plan to sell a home or investment house, do so yesterday.


8. Sell junk bonds.


9. Sell commercial real estate.


10. Sell most commodities.


11. Sell developing company stocks and bonds.

What January can tell us about the market rally
MoneyWeek

....Gary Shilling, in his latest Insight publication, says: "…, at some point, stock investors will likely have to consider seriously the corporate earnings prospects for this year. At the end of 2009, the S&P 500 index was selling at 20 times the $56.45 in operating earnings per share for the last year estimated by top-down Wall Street strategists – a hefty number. They forecast $60.59 for this year, so the stock market is selling at a 19 P/E for 2010 operating earnings, still very high by historic standards. This earnings estimate assumes a sharp economic recovery this year with real GDP rising 3.5%, according to the consensus forecast of economists.

"In our view, economic growth will be much closer to zero this year with S&P operating earnings around $50 per share. That would put the stock market selling now at an unsustainable P/E of 22.

"If we're right and the economy weakens rather than strengthens early this year, stockholders will probably be in for an agonising reappraisal. That's not true at present. The VIX index, which measures volatility in S&P 500 options, recently dropped to 20, indicating investor complacency. Stock trading volume has fallen sharply, suggesting waning shareholder interest as does the net withdrawals from US stock mutual funds."

MyView

He invested in Treasury Bond in US when yield is 14.7% in 1981 and sold it in late 2009 when yield drop to 3%. His compounding yield is 20.1% over the last 30 years. He is one of the top forecaster in USA with good track record.

His analysis through INSIGHT is very comprehensive and easy to understand. Hence, it is recommended to take a look at his view before we made any investments.