photo by Rednuht

That’s a very tough question, indeed. To be perfectly honest, I’m looking at this market and I’m somewhat dumbfounded. If you look at continued emerging trends I think that you are going to see higher demand for basic materials, agricultural products, health care, and anything else tied to a diversified growing economy. Same goes for international stocks as a whole. The problem is that these sectors had a huge run-up for a number of years, especially in 2007, and you’d have to believe that they are about to cool off in time.

Without a doubt, the award for ‘most beaten sector’ of the year goes to the financials. To see once mighty companies and stocks like Countrywide Financial, E-Trade, Bank of America, Citigroup, and others hit lows like they have is quite alarming and humbling for the U.S. economy. Everyone is running for the hills and abandoning the sector altogether, and contrarian (do the opposite of popular opinion) views point towards this sector rebounding at some point and now being a possible time for bargain hunters to jump in. However, the end is not completely in sight yet, and with foreclosures expected to increase for at least another two quarters, all bets are off.

Mostly because of the problems with the financial sector, prospects for the domestic market as a whole are rather gloomy, with the possibility of a recession and economic fears growing. In fact, exit polls for the presidential primaries have detected that the biggest concern at the moment for voters is the economy, not the war in Iraq, not Social Security, and not even health care.

My strategy, at this time is to diversify my holdings by sticking to mutual funds in my retirement and personal accounts with a strong leaning towards international mutual funds. Prospects for the next year or so simply look brighter overseas. You can draw your own conclusions.

Where will you be investing in 2008?

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