Investments and market trends for 2010

Stock markets around the world have experienced 9 months unprecedented growth. Only in the United States it is just over 60 percent. What about the year 2010? Retaining stock markets growth or correction? As usual, end of year period is the time for outlook, predictions for investments and market trends.

U.S. stocks are still well below its peak from 2007. This does not automatically mean that they can still be considered cheap. P/E ratio of S&P 500 is already 20 percent above the long-term average.

source: R. J. Schiller. Links for fundamental historical data.

But still there is a space for further growth but in slower pace. On average estimated revenue growth in 2010 is 27%. The growth supported by improving mood in global markets and ever weakening U.S. dollar, which makes U.S. goods cheaper.

Stocks

With coming economic recovery it is best to invest money in high-quality companies. Particularly those that have big cash and continue to make high profits. It is important also to think globally. Next year is expected that companies will overtake consumers in spending. Especially in Europe and Asia.

Bonds

Is also pragmatic in 2010 to invest in bonds of shorter maturity and focus mainly on quality. You will protect yourself against raising interest rates.

Reasonable option is to mix a high-yield bonds and government bonds. Investors should also not ignore the threat of inflation and thus it is appropriate to invest part of your money in bonds which are protected against inflation, known as TIPS - Treasury Inflation Protected Securities.