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“A Random Walk Down Wall Street” author Burt Malkiel on why the economy is in much better shape than during the financial crisis in 2008.
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We -- 99% to help collecting so obviously 180 from yesterday and even with today's you know wild ride on the street Liz come on the heels of yesterday's massive losses our next guest says.
There's no reason for investors to panic.
Joining us now and a Fox Business exclusive is Burton mall deals offer up a random walk down Wall Street.
-- you say this is no repeat of the financial mess we experienced back in 2008 why is it not.
It's not because the economy is really in a lot better shape we were in a big hole.
There had been housing bubble.
The housing bubble has deflated.
Houses are down.
35 to 40%.
From where they were in 2008.
And housing affordability.
Is better than it -- -- been in history.
Now that doesn't mean we're gonna have a recovery in housing it wouldn't surprise me to see housing go down house prices go down a bit more.
But the point is we have adjusted.
And we've adjusted a lot consumers.
-- horrendously.
Over indebted in 2008.
There's still over indebted.
But the data look very very much better.
And in fact if you look at debt service obligations of individuals.
The really look pretty comfortable now.
So again the adjustment has been made.
It doesn't mean that we couldn't have another weak quarter but I think the odds favor a second half of this year that's a lot better.
Then the very sluggish first -- But professor what about the Fed statement that was made today and that is that.
They still see decidedly negative atmosphere and very sluggish growth not to mention that they are not going to even touch interest rates.
Her mid 2013 now this is an interesting point that -- actually put -- point on the calendar.
What what does that say to you.
Well look there's no question about the fact the economy has been at stall speed.
And just as a bicycle list when He slows down risks falling off.
The economy in the first half of the year simply stunk.
And does the Fed is recognizing that so so I would -- I'm expecting it to you see a double dip recession no I don't.
No I don't and I think that.
What I don't see is very vigorous growth in the second half.
But I think that a 2% growth in the second half.
Is very likely and I would I would contradict you that the Fed really did nothing.
I think that they in saying.
That they are going to keep these extraordinarily.
Low interest rates going.
For at least a couple of years is a very very big deal and I think the market finally.
Understood that.
-- -- the Fed can do very little about what happens over in Europe how big of a concern is that because it seems like here in that we we tend to forget about it 83 for five weeks and that it rears its ugly head again.
Europe is a mess and I expected to continue to be and that's however.
Asia is growing rapidly.
China will slow down from a ten and a half percent growth rate to probably -- 9% growth rate.
But China and the rest of Asia is doing well the forecasts are that India will grow at a faster rate next year than the rate this year Brazil is growing so I agree with -- Europe's a basket case but the rest of the world is growing.
And that's one of the other reasons why I am very optimistic.
About corporate earnings because for many of our multi national companies.
What happens in China India and Brazil.
Is just as important as what's happening in the United States.
And and we have seen that an end and professor and I'll kill -- for our viewers who have perhaps don't know as much about you as we do.
It's very important point out why we should listen to you wrote that book random walk on Wall Street.
It is one of -- -- best sellers of finance investing of all time how what's it's in -- which printing 5000 different.
Because this the day that tenth edition and those sales are between one and a half and two million.
But part of part of your theory is that a monkey throwing darts at the stock chart might very well do as well as as a fancy pants pave the a lot kind of finance investor.
Or or somebody -- it was obviously paid to do this kind of thing would you be a buyer here you sound so optimistic.
-- Do not forecast.
Stock prices I don't know whether the stock market's going to go up or down tomorrow.
And not only do I not know that nobody else knows nobody can consistently time the market.
As my friend Jack Bogle likes to say in fifty years.
I've not only never known anyone who could time the market but I've never known anyone who knows anyone who -- time in the -- What I would tell you is this.
That people buying today when they look back five years from now are going to be very happy that they did.
Because stock markets in the United States and in fact all over the world today are very cheap.
Died -- book is a random walk down Wall Street professor Burton -- -- thank you so much there.
Thank thank you.
