Economic Predictions for 2009

There are some scary predictions over at CNN/Money - several top thinkers in the financial sphere were asked what scenarios to expect in the year ahead. Here's part of what NYU professor Nouriel Roubini had to say.

For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.

The truth is, over the past 10 years, you would have gotten a higher yield on FDIC-insured CDs over putting your money in the stock market. And when Roubini says "low returns", please keep in mind that through the miracle of compounding interest if you find CD Rates with a higher yield (through a service like MoneyAisle.com), you can make a tidy return on your cash investment - guaranteed growth as opposed to watching your savings crash and burn in the stock market.

I'm reminded of the tortoise and the hare fable - slow and steady growth wins the money race.