Where will the market go in 2007?
Markets are hitting new highs. The real estate bust is officially underway. And how much longer can the U.S. consumer carry on? Tell us where you think the market is headed in the next year, and what you're doing to position yourself.
i think parma meds will be big in 2007 with merk and pizfer and celg and other leading the pack
I think that the stock market is going to steadily increase to all time highs in the next year. I would move some of my assets from real estate and transfer them into the stock market. I don't believe in soft landings when real estate tumbles, I am trying to position myself to be balanced.
I believe that real estate in the South will do well - the overheated real estate locations will be the ones that bust for the short term - and the bust will only be for the people that entered late (last person in.) If they can hold, they will make money - if not, all will be lost for them. The overall economy is set for a boom in 2007 through the end of the decade - particularly when we officially leave Iraq.
I think the Florida market will continue to adjust downward for another 6 to 12 months because the current Sellers in the market have still not come to the realization that they will not get the same price as their neighbor did a year and a half ago. There is more product listed every day and until prices drop considerably, 25% to 35%, new Buyers don't have any urgency to buy.
I belive that we are in a cyclical bull inside a secular bear. The yield curve has been inverted since early '06, which has always indicated a coming downturn. The secular bear will not finish its run until the S&P500 P/E ratio goes under 10. That will be the real buying opportunity. Until then, I'm 65/35 bonds/stocks. And every time my stock funds increase $10k, I move the profit to bonds.
We've had a great run in real estate. I can only hope for a soft landing. I predict a lateral move for the next 5 years.
That slow hissing sound of the real estate market deflating in the over-heated areas will soon make the sound of a full-blown wind bag! It is fantasy thinking to believe that the rising costs of housing can continue to far outpace people's incomes and that people can afford to continue paying upwards of 60% of their gross incomes just to say they live in someplace like "beautiful Orange County, CA"! This nonsense is simply unsustainable! Thank god that this "fantasy land" is now experiencing a reality check as prices are finally leveling off. It is absurd that a family can make well over a six figure income, and yet their choices here in the OC amount to a 3 bedroom condo with a carport! What's wrong with this picture folks? Beware of those that profess "we've hit the bottom and blue skies are ahead!". These people are usually realtors and home builders!
I believe that the south will do the best this year and in the coming years. The best market to be in will still be the phoenix/ Scottsdale area. 12,000 people monthly are moving to the phoenix/ Scottsdale area and it is projected by the U.S. Census Bureau that in the next 23 years arizona will have the second highest population increase in the U.S., with statistics like this it is impossible that the demand for Real Estate in these areas will not increase. Everyday you hear about how the bubble is about to burst but that is actually impossible a market can never burst unless everything that is supporting the markets bursts too. In the case of Real Estate this would mean that the cost of materials to build a home would have to become way cheaper in order for Real Estate to ever burst. There can be a cooling in markets but never a burst. Invest for the long term in the southwest and you will see a great return on your investments. The cooling markets in places like phoenix will not be cool forever, the same factors that stirred up the first boom are still there and when the time is right they will cause another boom.
The real estate will correct in a major way. It will be down 50% in hot markets such as the SF Bay area and less so in other markets, mimicing the early 90's correction in Japan.
Stock's will selectively benefit from the reallocation of capital by investors. All the two and three house holders will sell at a decline and reinvest in bonds and stocks. Should see some activity in 2007 with excelleration in 2008.
1. Energy Sector will do well as the global demand is increasing consistently, especially from big developing Economies like China and India.
2. Technology will suffer initially during the first Qtr (mostly a break after a long bull run) but slowly pick-up steam in the subsequent Qtrs.
3. Since the Job-market is well positioned, Retail market may do well.
Watch out for Consumer Electronics and Computer harware related companies;
4. Financials - May hold steady or downward in the first 6 months (due to a long run in the last 3 years) and pick-up a little during the 3rd and 4th qtr. But they may surprise one more year !!
5. Healthcare : God only knows; Whatever rearch is going on in the industry...doesn't matter. Still people are dieing due to Cancer !
Healthcare may do 10-15% better than 2006.
With real estate being old news I anticipate the stock market to continue to increase at a moderate sustained pace. Especially since the shift of most companies retirement plans have gone from pensions to 410K's. With the automatic deductions and matching of 401K's, the market will see a steady influx of capital so barring any political disaster in the near future, the market should rise at a rate consistent with the 401K input.
Unfortunately we do not live in a monochromatic environment. Globalization has its own sharp edges. HIV, Avian Flu, Shiite/Sunni 'disagreements', political go it alone policies (all countries), and "when in doubt use the military" will be next year's themes. Be prepared for a significant correction when the 'balance sheet' begins to come due. There were lessons not learned in the the "Japanese correction" of the last few years. 65/35 bonds and stocks sounds smart to me. VOIP and free WIFI Max is going to turn the telecommunications arena on its 'ear'. The internet will be a 'taxing issue' next year (look at christmas on line sales!). And the Democrats will 'find' enough to rock the Republicans on their heels to position themselves for a 'change' in the White House (it will be made easier when the Republicans 'over react'-see my military comment). I would rather get over it now then wait a few more years and really worry.
I think this whole housing situation has been caused by a cartel of builders n realtors. I hope nothing profitable for any of them from now on. Let them suffer.
I believe the market will sky rocket to new heights on 2007. The terrorists will have a very big revelation that they are crazy and will stop killing everyone. We will leave Iraq on a good note, which will stablize the oil industry. $1.00 per gallon for gas, since the greedy CEO that made $400M in bonus will retire and someone less greedy will take his place. If you think the real estate business is in trouble, good. Buy property now, while you can still afford it becuase when the real estate market does shift, watch out! Baby boomers and rich investment banks will "stimulate" our economy to new heights in 2007.
I am in the real estate business and don't appreciate the "majority" of citizens who "think" realtors make a fortune! It is a demanding 24/7 job with NO BENEFITS. As realtors, we have to invest in our own futures. We do not have some big company helping us along....of course the market is outrageous in the Bay Area. But for you folks who live in the midwest and the east in snow, wouldn't you rather live in sunshine and warmth if you "could" afford it? Think twice about the real estate market busting here because it's not going to. 2007 is going to be just as crazy as the previous years. Oh and cudos to the many builders and real estate agents who have made their "fortunes" in real estate. Oh and Jimmy Carter from The Woodlands, Texas this is for you...I would imagine if you had the opportunity to make lots of $$$ in real estate, you would jump at the opportunity, but perhaps you've already made your fortune. Don't knock people for being successful! Even if it is real estate.
The Fed Reserve is widely expected to keep short term rates steady. It did not raise rates in last meeting. That came after a Gazilian short-term rate hikes all the back from 2004! I am confident short term rates will not increase anytime soon or later. Inflation is in check for the most part. Housing Market has now taken over as the biggest risk! housing market has sank to a 3 yr low. This is a huge indicator of overall weekness as wll as the Consumer Spending Trends. The funds rate is very important, while not high by historical standards but highenought to put a crimp in borrowing and consumer spending. If people don't spend money,borrow money, etc.. we will have a problem. It is called a recession. might be premature to expect that the Fed will ower rates in 2007, I think the housing market will be so severe that it may force the Fed to lower % rates several times in 2007. maybe as low as 3.50 to 4.00%. As a result, you will see rates decline and housing market start right back up where it left off. this will pump blood back into the housing market and hopefuly we will see a Frenzy in buying and refinancing for some time to come. My Advice, stay where you are at-2007/2008 will be a fantastic year in housing. I don't think it will be as Fantastic as 04' and 05' but you never know?
I think the stage is set for a meltdown of the economy, starting from the financial market. Too much liquidity inflated all the asset prices, making people feel rich. But it is not real. Fed and all central banks are 'hijacked' by the wall street. Too much complacence in the market.
To much Hype! The Real Estate market always has minor adjustments, and then we see some significant rallys like the 1980's and the last 4 years!! Which is great. My family has been buying and selling all types of properties for over a 100 years! Only 2 times in that 100 years did my family loose money. My grandfather lost 5 properties immediately after the depression 1928-1935, and my father took a 30 percent hit on 4 properties in 1989, for properties he purchased in 1988. Other than that it has been smooth sailing, with profits (after Capital Gains taxes) of $100K to $1.8M. No property is held longer than 5 years, unless the rental income covers all expenses, then they will hold the property in their portfolio. Words of wisdom from my grandfather, that I will share: "Real Estate is an asset that you can see and touch. There is no CEO salary being paid out of it, and it increases in value (small or large) through war, routine stock market adjustments, interest rate hikes and even during some of the worlds most horrific events (JKF shot,911 etc). You can always pick your price with real estate, if you want to make more money - hold on to it for a little longer. But the number one rule is -- don't buy something you can't afford -- because you are no longer in the driver seat -- everyone else (renters, mort co., and market adjustments) will be driving you into the ground before you can reach the top of the mountain!
The family projects : Supply and demand is what is driving this market now. In 2008-2009 once exisiting supply dries up -- a moderate rally will resume. Oceanfronts properties will grown at a faster rate at 7% to 18% in 2008. They feel many people bought properties over their means, and are selling now due to affordablilty (increases to local R/E taxes a big thing for people).
My grandfather used to like the stock market and bought stocked like rubbermaid, GE. But he no longer buys them. He said, you have to know who, and what the company is about before you buy. Buying into a company that had a longterm CEO with a normal salary and a company that had "lifer" employees was a company he would consider doing business with. (remember this is my grandfather comments). He says, the day that CEO of a companies starting making more than the president of the United States, and when the average time an employee stayed with a company less than 10 years. That's when he said, no more stocks for me until the business ehtics come back into the business market place.
Old school theory.
Where the market is headed next year is irrelevant. At any point in time, some sectors are beaten down, so one can always pick up good value. If the market tanks, one can double up on index funds, and if it goes up a lot, one can unload the appropriate index fund. It is all about asset allocation and rebalancing as the market hits extreme values.
Tech stocks are a good play in 2007 according to most experts. Cisco, Oracle, and Microsoft are top rated. In my opinion, an undervalued stock ready to makes its move based on solid performance and exceptional products is Sun Microsystems (SUNW). Sun was the darling of the dot com era and is poised for a large return. Their T2000 server is just a precursor of things to come.
Real Estate is staying on the market longer. This is a telling tale of what is to come.The country is going to get hit hard both in stocks and real estate in 2007.
If I go by all the positive comments I read on the board I am sure we are going to have a real estate hard landing and a stock market crash. Everyone is to bullish. I live in South Florida where the medium income is $30,000 and houses are 500,000 and up. Then you have hurricane insurance and real estate tax. How can people afford this with out going broke. I see real estate going down for years until everyone just buys for a place to live and not "a great investment" You know what they say when everyone is in its time to run for the hills. Just like tech stocks in 2000. Just compare a chart of the nasdex in 2000 and a real estate chart they have the same straight up rocket ship point in just 4 years. Lookout below!
I firmly believe people need to get on the globalization bandwagon. International stocks, especially in Emerging markets, are doing favorably well. I am an aggressive risk taker and I have a substancial part of my portfolio in the International markets. If American companies are outsourcing and taking risks, why can't I?
We must be careful making any generalizations about realestate, as there are just as many markets that will see 5%+ increases as their are decreases. The condition of the entire market will be one of less growth that we've seen in recent years, but that of a market correcting itself to healthy, sustainable levels of appreciation.
I believe the stock market will grow moderately throughout the year, with large caps seeing the best gains. Lookout for small/mid caps if the fed is actually able to begin cutting rates the last half the year. As a side note, some of the most attractive long term buys in the market are Natl Home Builders such as Centex, DR Horton, Toll Brothers, etc. Their PE ratios are in the single digits, while the market as a whole is trading around 16-18.
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