After a rough start, U.S. stock markets have performed much better this year than expected.
And not unexpectedly, investor sentiment is turning more bullish. A Charles Schwab survey of 300 active traders found half bullish, 35 percent neutral and 14 percent bearish.
The Denver chapter of the American Association of Individual Investors brought together a panel of three experts last week with divergent views to predict what might be in store for stock markets in 2010.
They agreed that dividend-paying stocks with international exposure offered some of the best opportunities. And they urged investors, as always, to pay attention.
Bulls will rule
Panelist: Nanette Fahrenbruch, financial adviser with Edward Jones in Lakewood.
Quote: “We have record amounts of money on the sidelines.”
Predictions: Unemployment will fall, inflation will remain under control and government debt is still manageable. The holders of $8 trillion in conservative investments will tire of low yields and drive equity prices higher.
Her picks: Emerging market natural resource plays like Brazil and stocks paying dividends with global exposure. Bonds should be handled carefully.
Turning bearish
Panelist: Kenneth Van Pala, individual investor from Littleton.
Quote: “As soon as interest rates start to rise, and they will, there will be a lot more risk.”
Predictions: Economies in developed countries will remain under pressure, and U.S. unemployment rates stubbornly high. Consumers straddled with mortgages worth more than their homes will spend cautiously.
His picks: Investment-grade corporate bond funds with short to medium durations; companies raising their dividends like Xcel Energy, Wal-Mart and Kinder Morgan; undervalued telecom stocks and the Powershares US Dollar Bearish Fund, ticker UDN.
Shifting into neutral
Panelist: Rick Hebert, president of Hebert Advisory Services in Golden.
Quote: “The market is starting to top out. It won’t be very exciting. There is a new normal out there — plain vanilla.”
Predictions: Stocks trade in a narrow 5 percent up or down range, reflective of a sluggish underlying economy. Political firestorms will continue in Washington with tax increases looming and fatigue over government intervention growing.
His Picks: Large-cap dividend payers like Chevron, Johnson & Johnson; preferred shares; fixed-income ETFs like ticker AGG and SHY; Exchange Traded Debt Securities.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
