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What Can We Expect In The Second Half Of 2010?

5 July 2010 No Comment

We’ve crossed the halfway mark for the year.  Let’s look at what we can expect economically, politically and more in the second half of 2010.

The Economy

Even some of the most bullish economists over the past year have been calling for an economic slowdown in the second half of 2010.  This is primarily due to the idea that the stimulus would start wearing off and some of the inventory rebuilding that occurred in 2009 is for the most part finished.

For those of us who have been bearish on the economy despite a major run in stock prices, the data seems to be starting to validate our views.  The June economic data in unemployment, housing, consumer confidence, etc. was all pretty indicative of a slowdown.  As such, even the mainstream media who tend to be on the optimistic/bullish side are talking much more of a “double-dip recession.”

Whether you hold the view that a double-dip is coming or believe that we never recovered, it seems like most are leaning towards an economic slowdown in 2010.

Politics

The second half of 2010, unfortunately, will likely see another leg up in the partisanship banter and political rhetoric that most of us are really tired of.  As we approach a mid-term election in November, the Democrats look to be on the defensive.  No matter where you stand, most of us would agree that America is very, very divided these days and things have definitely looked brighter.

The Markets

It’s tough to say where the next few months and the rest of the year will look like in the stock markets.  We’ve had a healthy correction here.  My guess is that we’ll either trade in a range close to where we are now, or head lower.  I don’t think we will break the highs that were established a few months ago to the upside.

I think investors need to be cautious these days as there are just too many variables that are difficult to predict.  I prefer dividend stocks and a large cushion of cash for the near future.  I would welcome a major leg down so that I can buy some stocks at much lower prices.

Big Questions…

  1. How will the Gulf Oil disaster be resolved?  Will it be resolved this year?  If not, that is very bad.
  2. Will Obama & his party attempt to slam through additional legislation before they lose such a huge majority?  Immigration?
  3. Will unemployment continue to worsen?

What To Do

For me, it’s all about sticking to my game plan.  That game plan means being smart with my money, saving money, and investing in my additional income streams.  I’ve actually been increasing my income through the last two years despite an awful economy.  Decoupling your financial life as much as possible from the broad economy is the best thing we can do.  Obviously this is difficult in some areas, but this is why I believe in working on additional income streams.

Good luck for the rest of the year!

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