What do you believe?

A few weeks ago USA Today published a piece in which five Wall Street experts say that it's time for investors to get over their fears and get back into the stock market.

Right away I was skeptical of this advice, as I always am whenever so-called experts act like they have a crystal ball that can predict which way the markets will go. Then I read the article and... well, here's a few quotes for you:

"If you don't believe in a depression, and I don't," says BlackRock's chief equity strategist Bob Doll, "stocks will go up and bonds will go down."

Sorry Bob, but I don't base my investment decisions on wishful thinking. The market doesn't care if I - or anyone else - "believe" in a depression.

Ok, here's another stand-out quote from the article:

Adds David Bianco, chief U.S. equity strategist at Bank of America Merrill Lynch: "We're broadly bullish on U.S. equities. It's important for investors to get back into the asset class. Go buy mutual funds. Go buy index funds."

Sure, it's important for investors to get back into mutual funds... important for people who make money selling mutual funds, that is. It's probably less important (i.e., profitable) for the investor.

In the USA Today article there's a link to another article that outlines what could go wrong to thwart these experts' optimistic predictions. That's definitely worth reading. Top on the list: Job recovery stalling out. While it's true that recent U.S. jobs data improved, it's hard to say if that was due to seasonal jobs created by the holidays or if the trend will hold in the long term. 

These are just a few of my brief observations. I encourage you to read the articles yourself and form your own opinions.

You may believe that the stock market will go up. You may believe the stock market will go down. You may feel that now is the time to sell bonds, or buy bonds, or to sell gold or buy it. The important thing is that you base your opinion on solid facts, not someone else's opinion. So before you buy anything, do your homework. And be careful where you get your advice from.

Original publish date: January 26, 2011