Over the course of my career I have known many equity market strategists. I found nearly every one of them to be intelligent, insightful, articulate, analytical and creative. The best of them, in my view, have also shown a tendency for contrarianism. Regardless of their skill set, they are saddled with the most impossible of tasks – to make predictions about the stock market. Most of them are required to have annual price targets for the S&P 500 and many of them maintain model portfolios. Those who work at large firms have access to high-powered analytical tools and databases as well as a bevy of industry analysts who can often help them see the big picture by discussing the particulars of each industry. We see them quoted often in the media, especially when something dramatic happens in the market. The best of them can recognize and explain market trends as, or even before, they develop, and the least of them are still very entertaining to listen to.
One strategist whose commentary I find myself enjoying a great deal lately is Liz Ann Sonders, the chief investment strategist at Charles Schwab. I first heard her speak at a conference a few years back and ever since have tried to keep up with her work. I find her comments to be very reasonable, quite insightful and easy to understand and appreciate. In contrast to many of the big Wall Street strategists, she views herself as a “market interpreter” and not a forecaster. In my eyes, this makes her views and opinions very important for the average individual investor. She has an uncanny knack for explaining complex issues in a very down-to-earth and approachable fashion.
She was a cool, rational voice in the middle of the bear market and financial crisis and she continues to say and write things which I think are right on. A couple of examples of her current views:
On the economy: “I think the recession actually ended in the second quarter… We’re starting to see the effect of what I have been calling coiled springs. There was such a compression in the Fall of 2008 in every metric of the economy that we’re now in the beginning phases of the natural snapback from that.”
On inflation: “Not a near-term risk at all in my opinion.”
Stock prices a year from now: “They’ll probably be higher, but it’s very unlikely that the path on the way to higher will look like it has the past seven months… I expect a choppy path, but that may be the better path.”
Bonds vs. stocks for the long-term: “After a ten-, 20-, 30-year stretch in which bonds have outperformed stocks, the cynic in me can’t help but ask, “Now you’re going to bias your asset allocation dramatically towards fixed income because bonds have outperformed stocks?” I’m often skeptical about supposed major paradigm shifts, particularly as they relate to how people invest their money based on performance that has already happened…”
With so much noise and hype out there, it is very refreshing to find someone dedicated to helping the individual investor sort it all out. Bravo!
Here is a link to her bio: http://www.aboutschwab.com/press/experts/sonders.html
Here is an interview she had with Kiplinger’s Personal Finance magazine: http://www.kiplinger.com/magazine/archives/listen-to-your-portfolio-.html