Here are my four investment themes for the next year onward:
1) The U.S. economy is likely to be be weaker than the global economy:
A. The dollar should be flat to lower.
B. This will result in increased U.S. exports and should be bullish for U.S. large-cap blue chip stocks.
C. Increased U.S. exports could also offset weakness of the housing market and result in a soft landing.
D. Major foreign stock market indexes should do well relative to the S&P 500.
E. Assets denominated in major foreign currencies should be flat to higher against the dollar.
F. If the dollar falls, causing commodity prices and inflation to rise, it will be bearish for U.S. bonds.
2) S&P 500 sectors which are “riding the wave” in scientific research and engineering innovation should outperform the S&P 500 itself:
A. Health Care
B. Info Technology
3) If energy, commodity prices, real estate, and U.S. inflation fall in the short term, they are certain to rise in the long term. Accumulate on weakness:
A. Energy producers.
B. Metals and mining companies.
C. Inflation-protected securities.
D. Real estate, forestry companies which own much real estate per share, and possibly homebuilders.
E. Assets denominated in Canadian and Australian dollars.
F. Water resources.
4) We are likely to see a trend to increased participation by Democrats in the U.S. government for at least several years:
A. Taxes and government spending on domestic social programs will tend to rise.
B. Defense spending and military campaigns abroad may fall.
C. The stock market typically responds well to Democrats and to governments where Democrats and Republicans have equal power.