What Roubini Said

Nouriel Roubini, a well-respected economist, who, some financial experts say, correctly predicted the magnitude of the financial meltdown, is not too optimistic about our economic growth for the next few years. Roubini, who spoke at the Reuters 2009 Investment Outlook Summit in New York, said the United States would experience a U-shaped recovery, where growth would remain relatively flat, or below the historical trend, for several years and then recover. He is, however, bullish on emerging markets.

Attending the Reuters conference were 51 economists from around the world. About two-thirds of those agreed with Roubini while the others felt we would be having a much more robust recovery, representing a V shape rather than a U. According to Reuters, the forecasters expected little inflationary trends but a 'stubbornly' high unemployment rate through 2010.

In the September 7th Barrons Myles Zyblock of RBC Capital Markets said of the past markets move that, 'The market is digesting a lot of gains and it won't take much to trigger a correction.' Barclay;s Barry Knapp believes that a possible 8.5% downside before year-end is in the offing. Others thought a possible 15% correction by the middle of October was in the technical charts.

But, the good news and consensus is that the possible correction will be shallow and short. The S&P 500 low of 676 will be, according to the experts, a 'generational' threshold. Which is a nice way of saying it won't happen again any time soon and we can tell our grandkids where we were when the markets almost imploded.

Still, looking forward, the experts are factoring in higher multiples, saying that the market can indeed go higher.

And, what if you want to make a mutual fund investment in a non-qualified account for this quarter? I would wait until after any capital gains were paid out by the mutual fund before making that investment. It doesn't make sense to buy a fund have to pay taxes on the capital gain distribution and see you money take a possible hit before the end of the year. Also, if the experts are right you may be able to buy that fund later at a cheaper share price.