Bob Doll’s crystal ball into 2010 and the next decade
This post is a guest contribution by Dian Chu, market analyst, trader and author of the Economic Forecasts and Opinions blog.
BlackRock, Inc. (BLK) Vice Chairman Bob Doll has been putting out annual predictions for 15 years. Doll, who helps oversee about $3.2 trillion at BlackRock, the world’s biggest asset manager, just released his ten predictions for 2010 and for the next ten years. Eleven of the twelve predictions he made for 2009 were right. Below are highlights of his latest market forecasts.
In general, Doll believes US stocks will outperform cash, Treasuries and other developed economies with S&P 500 rallying another 12% this year, reaching 1250 from its January 4 open of 1116.56.
The US is on its way to recovery, but the economy will grow slower than that of a typical recovery mainly due to heavy debt load. Inflation will be a “non-issue” in the US, Europe and Japan this year even with rising prices of gold and oil. The US dollar will likely remain weak in a broad trading range with the euro and yen.
Doll also noted structural issues in the economy would continue to present problems. Chief among them are
Emerging-market stocks and economies will outperform the developed world this year. His “favorite secular story in the emerging markets remains Brazil.” (Note: Barclays Capital recently warned of a possible Bovespa (BVSP) correction in Q1 or Q2 this year based on technical chart analysis).
Furthermore, he advised investors should prepare for rising taxes following healthcare reform and protectionist government policies if the unemployment rate remains high.
Doll favors healthcare (especially managed care and healthcare services), information technology and telecommunications sectors. However, he advised underweight on financials as they are likely to continue to underperform.
Note: Doll’s predictions differ from that of Blackstone Group LP’s Byron Wien’s. Wien’s ten predictions for the new year call for the S&P 500 to finish 2010 flat, US GDP to expand about 5% and financials to outperform the market.
Doll’s predictions for 2010:
Doll’s predictions for the next 10 years:
Doll’s advice to investors
• Look for quality in all styles and caps.
Here is the video where Doll appeared on CNBC on January 6, discussing his latest predictions. His full commentary is available at BlackRock’s website here.
Source: Dian Chu, Economic Forecasts & Opinions, January 7, 2010.
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