2013: You Don't Need a Weatherman
NEW YORK ( TheStreet) -- This is about the time of the year you begin to see predictions from experts as well as, sadly, so-called experts, about what's going to happen next year. "Gold will be up, employment down, consensus earnings will degrade during the second half of the year, and markets will be flat for 2013."
That may be for some, but that's not me.
I'm not a predictions guy, at least not at the granular level. This is, to a degree out of respect for the markets in the same way people tend to respect Mother Nature -- such a dynamic force really defies prediction. In my experience, predictions of Mother Nature and with the markets tend to lead to misery.
Economics are another story. Here I feel a little more comfortable about what the dismal science is saying regarding the prospects for 2013. The most recent read of the Chicago Fed National Activity Index shows the eighth consecutive reading below zero -- not good. The index is a weighted average of 85 indicators of national economic activity drawn from four categories of data: 1) production and income; 2) employment, unemployment and hours; 3) personal consumption and housing; and 4) sales, orders and inventories. Of the 85 variables measured, 54 of them made negative contributions. While one piece of data does not make a prediction, I take the CFNA index seriously because it's so broadly based.For investors, it's important to act on facts and not on feelings. Feelings can enter the picture when there is uncertainty regarding an outcome, and unfortunately there are an unending string of uncertainties to distract us: First it was Europe . . . Then it was the importance of initiating a QE III strategy . . . then it was Europe . . . then it was the impending failure of QE III . . . now it's the fallout from riding merrily over the "fiscal cliff."
Take ActionBut the weakening of a broad base of economic indicators over the past eight months are the facts and I believe investors who heed them will be prepared for at least an economic slowdown at best during 2013 or and a recession at worst. Armed with this knowledge, what should investors do?
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV