First Half Down; Second Half Up

By Dian Vujovich

It’s been quite a ride in the investment arena this year. The Dow Jones Industrial Average closed 2008 at 8776.34. Around 2:50 today it was 8427.96. As for the rest of the year, here’s how one well-known money manager expects things to play out.

Robert Dole, vice chairman and global chief investment officer of equities at BlackRock, Inc. (BLK), is optimistic about the future. According to his latest press release, he’s expecting stocks to post double-digit gains by year’s end, sees the S&P500 hitting 1,000 (mid-day today it was around 916), and thinks US stocks will out-perform emerging market and European ones.

On the other hand, he estimates that global growth this year will be the lowest we’ve seen since post-World War 11 and forecasts the first GDP decline in our economy in 50 years. Additionally, he’s expecting a double-digit fall for earnings, as was the case in 2008. Should that happen it would mark the first back-to-back annual drop since the 1930s.

Dole’s crystal ball sees bond spreads narrowing; energy, healthcare, and IT stocks outperforming utilities, financials and materials. Plus, a volatile stock market throughout the coming six months.

So what’s a Dole follower to do? Keep investing albeit slowing.

Doll suggests dollar-cost averaging into higher-risk assets —like stocks. Which ones? His favorite cyclical sector is energy, defensive sector choice is healthcare and IT his favorite growth sector.

When it comes to global opportunities, Asia ex-Japan and Latin America are two hot spots where he’s looking for economic revitalization.

The bottom line of Doll’s forecast, however, remains the same as that of any wise money manager no matter what creatures are running on Wall Street—storming bears or roaring bulls: Stay true to your focused and diversified long-term plan.

You do have a focused and diversified long-term investment plan, don’t you?