By Patricia Sellers
January 7, 2009

I stopped by BlackRock’s

midtown Manhattan offices on my way to jury duty this morning. Bob Doll, the giant money management firm’s vice chairman and chief investment officer for global equities, was giving his annual forecast. “I’ve been doing this for about 15 years,” he told me before he stepped up to the podium.

“This must be your most dire forecast, Bob?” I asked.

“No,” he said. “The headlines are going to be terrible. But it won’t be terrible for the markets.”

This historic year, as Doll told a group of some 20 financial journalists, he started out with 19 predictions (so much to talk about!), then tried to cut his list to 10, but settled on 12. In the interest of brevity (and convenience, as I’m penning this Postcard to you on my iPod Touch inside the jury screening room downtown), I’ll give you five of Doll’s predictions for 2009 that I find most intriguing.

1. The U.S. economy will post its first nominal decline in GDP in 50 years. With that, average household net worth will drop by double digits–also unseen since the 1930s.

2. Global growth will fall below 2% for the first time since 1991. We’re over the hump, though: The fourth quarter of 2008 will likely prove to be the period of lowest growth.

3. Inflation will fall close to zero in many developed countries. But widespread deflation will be avoided.

4. Corporate earnings will decline by double-digit percentages: probably 12%, following an estimated 21% dive last year. This means that 2009 will bring the first back-to-back annual drop in profits since the ’30s.

5. And now the good news you’ve been waiting for: Doll forecasts double-digit gains for U.S. stocks in 2009. Why is he hopeful? I’ll call it the rule of two-thirds: The price of oil has declined by two-thirds, he notes. And two-thirds of stocks now have price-to-earnings ratios below 10. Also, Doll points out, stocks are yielding more than Treasuries for the first time in 50 years.

Lots of firsts here, yes? Which makes forecasting all the more dangerous. But Doll–who spent his earlier career at Merrill Lynch, which is BlackRock’s major investor and now part of Bank of America

–makes a convincing case. “There’s never been more cash on the sidelines,” he says. “There’s fuel for the fire. Somebody needs to figure out what the match is to light it.”

In fact, the fire may be lit already. U.S. stocks are up 25% from their November 21 low, and Doll believes they’ll outperform European stocks as the recovery continues. “There’ll be selling squalls along the way,” he warns. In other words, buy with caution and hold on!

P.S. For more on BlackRock and CEO Larry Fink, see “Can this man save Wall Street?” which ran in Fortune in October.

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