Bespoke Investment Group 2010 Roundtable

Bespoke Investment Group, a popular and valued source of investment research, has a new post with the results of a virtual roundtable featuring twelve popular financial bloggers.  It is a great idea, and I appreciate the opportunity to participate.

They did a wonderful job, starting with an interesting list of questions.    I am enjoying reading the answers of my blogging colleagues.  It is a nice range of opinion.  The question format seemed to get each of us onto themes a bit different from our regular posts.

To get some specific investing ideas, you should read the individual responses as well as the summary article.  

Here is a segment from the article, just to get started.

At the end of each year, the big financial media outlets typically conduct roundtables to get outlooks from key players in the financial markets. Over the past few years, the individuals that run the best financial blogs and websites have become key players in their own rights, and their opinions are highly regarded by millions of loyal readers. This year, we decided to conduct our own roundtable with some of the major names in the online financial community, and it's all available for free to anyone with Internet access!

Twelve of the most popular financial blogs/websites agreed to participate in the roundtable. Each participant was asked to respond to the same 25 questions regarding their 2010 outlooks as well as their take on 2009. The responses we got were incredibly insightful, and they should really help investors form their own opinions on what is to come for financial markets in the year ahead.

Below is a list of our roundtable participants. We have created a page for each of them that has all of their responses, and we encourage you to visit their websites as well if you haven't already done so.

A Dash of Insight - 2010 Bespoke Roundtable Q&A
Crossing Wall Street - 2010 Bespoke Roundtable Q&A
Financial Armageddon - 2010 Bespoke Roundtable Q&A
Footnoted.org - 2010 Bespoke Roundtable Q&A
Paul Kedrosky's Infectious Greed - 2010 Bespoke Roundtable Q&A
Investment Postcards - 2010 Bespoke Roundtable Q&A
The Kirk Report - 2010 Bespoke Roundtable Q&A
Random Roger - 2010 Bespoke Roundtable Q&A
The Reformed Broker - 2010 Bespoke Roundtable Q&A
VIX and More - 2010 Bespoke Roundtable Q&A
Wall St. Cheat Sheet - 2010 Bespoke Roundtable Q&A
World Beta - 2010 Bespoke Roundtable Q&A

To start off the roundtable, we've created a matrix highlighting prognostications for various asset classes in 2010. Not all participants took part in this section of the Q&A, but the ones that did are included in the matrix below. As shown, the consensus view is that the S&P 500 will be up in 2010, bonds will be down, oil will be up, the dollar will be up, US home prices will be up, and China's stock market will be up. The projection for gold was split.  Please visit the individual Q&A pages (links above) to view each participant's projections along with price targets where applicable.

Below we provide various responses to each of the 25 questions. Remember that there is a Q&A page for each participant that shows all of their responses as well. The links are posted next to each participant's name above. Enjoy!

Comments

[oldprof]

Thanks, Paul!

Happy New Year to you, and to other loyal readers:)

Jeff

[Paul Nunes]

Excellent Jeff. I've really enjoyed my time on your blog this year!

Paul

[oldprof]

Mike -- Thanks for another strong and helpful comment.

When writing these year-ahead pieces it is always a challenge to focus on your own ideas rather than refuting others.

You have a valid point. I should write something more on what I mean by "normal and sensible lending." I think I did some RealMoney pieces on this, but perhaps not on the blog. Mostly I mean a resumption of normal commercial paper, home lending, business lending, student loans, and even resumption of securitization. Debt and equity are alternative choices for business in normal economic times, and public policy is aimed at restoring this.

As a general observation, let me note a few points. Looking at debt alone is considering only one side of a balance sheet. Any analysis should also consider assets. The debt should be compared to the ability to repay, and should link the specific debt to the specific payer. Finally, it is deceptive to make these comparisons at the bottom of a cycle.

An investment in human capital, a student loan for example, makes a lot of sense in this employment environment, but shows up badly in some charts.

I do not want to launch into a detailed critique of the site you named, but I suggest that you use your own critical skills. These anonymous guys have something to sell and present a one-sided viewpoint about debt.

I'll put a more detailed look on what I see as "normal" as part of the ever-growing blog agenda.

Thanks,

Jeff

[Mike C]

Merry Christmas Jeff,

In the Q&A you state, "The most important lesson of 2008 is very specific. We learned what happens when you get a complete cessation of lending in an economy that depends upon normal and sensible borrowing for regular commerce."

Can you quantify that? In your view, what magnitude of ongoing credit issuance and overall debt level constitutes "normal and sensible borrowing"?

I would point you towards this piece for context:

http://www.contraryinvestor.com/2009archives/monov09.htm

Obviously, debt levels have varied substantially over the decades since 1950 to present. Was 1950-1960 normal and sensible borrowing or the last 10 years?

Do we have many years of deleveraging ahead of us, or can debt levels stabilize at the current value?