Listeners and potential investors attending the annual market symposium at Winthrop University got encouraging news on Thursday - 2011 should be a good year.
The prediction came from Larry Carroll, a Rock Hill native who has turned his financial knowledge and business acumen into a Charlotte firm that manages more than $1 billion in advisory and brokerage assets.
Carroll based his outlook on history, trends and a willingness to take the right amount of risk.
He said 2011 is the year before a presidential election - historically a good year for return on investments. "It is the year when the administration gets things in good shape" for the upcoming election, he said.
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Since 1940, every third year of an election cycle has financially performed well. Historically, returns have been about 17.6 percent, he said.
That return might be too high for 2011, but investors should take the return the government and the markets give them, he said. Returns on investments should be at least 7 percent, and could go as high as 15 percent, he said. Anything higher carries too much risk.
"You don't need to take a lot of risks," he said.
But investors need to be willing to buy and trade, taking advantage of changes in the market. They also should be willing to buy blue chips stocks from established companies that pay a consistent dividend, he said. Yet, even with blue chips there can be times when selling them is the best option.
"Volatility is your friend if you let it be," Carroll told the audience of about 200 at the university's Vivian M. Carroll Hall. Carroll and his family were one of the initial donors for the building that was dedicated in 2009.
He encouraged investors to have a diversified portfolio that includes some investment in emerging overseas markets. These markets have yielded some of the strongest returns in recent years, he said.
Carroll said investors need to focus on what they can control - their level of risk, their investment plan, their relationship with a broker - and worry less about what they can't control - market fluctuation, political actions and global events.
Some global events, while capturing lots of attention, have little lasting effect on financial markets, he said, citing the current turmoil in Egypt as an example.
"The entire economy of Egypt is one-half that of Charlotte," he said. "This is not a big event in the grand scheme of things."
He was more concerned about China because of government manipulations of businesses and financial markets there. "It is hard to figure out because so much is rigged by the government," he said.
He predicted China would eventually become a bigger economic force than the United States, but, "they will go through a lot of pain to get there, and we will react to that pain."
Carroll said China should continue to buy U.S. debt, primarily as a way to secure its own currency.
If China stops buying U.S. debt, the result would be the United States would have to offer higher interest rates on our debt, affecting the deficit.
But, he said, there is "not a point in time we have to pay that debt. It is like a credit card; we have to pay the interest."
The debt needs to be reasonable and proportional to our gross domestic product, but as long as those figures are in balance, the national debt can be "carried forever."