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08/02/2007Analyst takes stock of economyMarket not calming down soon, he says
John Augustine, chief investment strategist for Fifth Third Asset Management, addresses attendees of a Wednesday luncheon at the Traverse City Golf & Country Club. TRAVERSE CITY — Investors don't need reality TV. Watching the roller-coaster ride of the stock market in recent weeks created plenty of suspense and anxiety, a top investment expert from Fifth Third Bank said. Troubles in the housing market, a crunch in corporate lending and soaring worldwide oil prices make it a volatile time for investors and the market likely won't calm down anytime soon, said John Augustine, the chief investment strategist for Fifth Third Asset Management, of Cincinnati, who spoke to a local group Wednesday at the Traverse City Golf & Country Club. "It's been a frustrating experience for a lot of growth investors,” said Augustine, a regular analyst on CNBC cable television business network. Those factors dragging on the market are slowing investment growth in traditional sectors like large-cap stocks, compared to traditionally higher-risk areas like foreign markets, where growth in recent months is especially strong. Augustine said national and global economic activity since the turn of the decade is a "poster child” for investors to diversify their portfolios and spread savings among a variety of sectors, including emerging markets overseas. "You need to be flexible and you need to be diversified,” he said. Midwestern states, including Michigan, continue to lag behind other parts of the country in economic growth with high unemployment rates, he said, largely because of the slumping domestic automobile industry. "We really need, obviously, the auto industry to settle down,” he said. Upcoming contract talks between labor unions and auto makers will be "hugely important” to reviving the domestic auto industry, he said. But Michigan-based auto makers can still be major economic forces if they can lead the way in developing alternative fuel vehicles. "Then you can see a whole new renaissance in the (auto) industry,” he said. The state also should continue to push the growth of its tourism industry to offset the downturn of the auto sector, he said, and maintain its worker retraining efforts to help idled auto workers find new job opportunities. The average investor should avoid trading on "emotion” and not try to stay ahead of the market's recent fluctuations, Augustine said. A typical holder of a 401(K) savings plan should check their asset allocation no more than twice a year and keep their investments aligned with a long-term strategy.
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