Happy 2009!

Everyone is finally over 2008, but the economy is still a concern for most of us. Lets face it, few investors made money last year, and most of us took a substantial loss. At least my 401K has been crunched :( Thank God I am 50% cash right now, and the rest is losing money in stocks. However I focus on long term investments and good companies, so I will survive and recover.

However my predictions for 2009 are not as pessimistic as most of what you read in the media. Most of the worst effects of the recession already occurred in 2008. No one knows what will really happen, but I will make a few economic predictions like I did last year with oil prices. Warning your mileage may vary as I am limited in experience and make lots of mistakes. But it is good to present views for you to think about and analyze.

Recession: We are still going forward with the recession, and businesses are hanging on to money carefully since borrowing is so difficult. I do not expect the recession to grow into a worldwide depression. The news reports comparing us to a depression are vastly exaggerated. Most people have not experienced a serious recession since the early 1980's. We have lived through recessions before, and will survive.

Jobs: If you personally have a good job you may not feel the recession. People who are job hunting or looking for a better position will have to take more time to find a great job, and may have to take a step backward right now. It is just a delay for the good times to come. My prediction is job loses will peak early in 2009, and by the end of the year jobs will start recovering. So if you are job hunting keep persisting.

Stock Market: I suspect we are getting closer to the market bottom. I suspect we are within six months of the bottom. It may take a year, but I am looking for evidence it is time to fully invest again.

Housing: I see no bottom to the real estate market until around 2010. The over supply of home will have to be worked off the market. I expect prices to fall another 5% - 15% in 2009.

Oil prices: This was my best prediction of 2008. On January 17, 2008 I predicted oil prices would peak and fall during 2008. I thought the bubble prices were way out of line at $105 per barrel, and thought oil would fall into the $60 - $80 per barrel by the end of the year and to $40 - $60 per barrel early in 2009. My prediction was based on the long term cost of alternatives to oil were in the $40 to $60 per barrel range. In spite of the gyrations of politics, wars and speculation, I expect prices to stay in the $40 to $60 per barrel range. We might see another over correction with prices falling into the $30's per barrel with the slow economy. There is an oversupply which will be corrected over the long term.

The best advice summary: The best thing you could do is maintain a very positive attitude. This one action will help no matter the crisis's you face, and will help you reach your goals. Heck you may even succeed with your resolutions. Spend some time every morning meditating on what is good in your life, and thank God for everything. Even the challenges and problems you face.

Have a great 2009! I will no matter what.
Steve