Every January, just after the turn of the New Year, Investment Advisor’s editors pick the brains of our Asset Allocation panelists, asking for their projections on the markets and the economy for the year. A number of their predictions are highlighted in the first table below, while the second compares projections made a year ago with the actual results.
When asked for his assessment of the U.S. economy and the financial markets in 2010 Standard & Poor’s Sam Stovall believes global investing will be the best source of outsized returns in 2010. As for the industry groups that will perform best in 2010, Stovall lists integrated oil and gas, diversified financial services, and “hypermarkets and Super Centers,” such as WalMart.
Gail Dudack, Dudack Research Group concurs with Stovall that global investing will be the best place to find alpha this year, but suggests doing so “more selectively.” She thinks the high flyers this year will be technology–both service and semiconductors–and healthcare, including service providers and generics. As for her biggest fear in the New Year, Dudack points to the U.S.’s “massive debt.”
LPL’s Jeffrey Kleintop is also looking to technology in 2010, but information technology. He also likes industrials and is avoiding utilities and telecom. Kleintop is not looking overseas for outsized gains and thinks that high-yield bonds are a better bet.
For Mark Balasa and the Alpha Group global investing is the way to go, with consumer discretionary and energy being the sectors to watch while avoiding healthcare.
Gary Shilling has long been the panel’s contrarian and he’s predicting that utilities, consumer staples, and food are the sectors that will show the greatest appreciation this year. He expects the worst performance to come from consumer lenders, homebuilders, basic materials, big ticket consumer discretionary, and commercial real estate.
When asked “When do you expect the economy will begin to match the stock market’s 2009 growth?,” the responses were well split. Two (Dudack and Kleintop) said “first quarter 2010, one (Balasa) said “third quarter 2010″ and Shilling and Stovall answered, “it won’t happen.”
None of the panelists was optimistic about the wind-dowd of government involvement in the economy, with three indicating it will be a prolonged, difficult process and the other two thinking that “the government is our permanent partner.”
As far as the Obama agenda responses ranged from feeling that it will have no effect on economic growth to it’s a major economic nightmare, to Sam Stovall’s assessment that “It will have good and bad impacts.