Stock Trader's Almanac 2010

2010 OUTLOOK

In 2010 midterm election year, politics is apt to dominate. Barack Obama may be considered a transcendent politician, but he will be hard pressed to avoid what has been the inevitable trend of presidential party House seat-loss in the midterm elections. Midterm election years have been third worst in the four-year election cycle, only besting post-election years (Page 32 and 130). Unfortunately, 2010 is also a "zero" year (page 129), which has the worst record in the decennial cycle. 1990 and 2000 were both down years, but 1980 was a very good year, up 14.9% on the Dow, and 1970 posted a gain of 4.8%, so all may not be lost.

We are coming off the second worst bear market since 1900, and at press time the market is battling to hold on to gains from the powerful bull rally. The lows set in March of 2009 should hold barring another financial implosion or a massive exogenous event. Serious damage has been done to the U.S. investor, and the scars to their portfolios and their psyches are deep.

The dollar, energy, and inflation are likely to be big economic stories in 2010. If the dollar is beset by the massive spending of the Obama recovery initiatives, inflation may be difficult to keep in check. Energy is always a major story, but the promised green revolution should have significant traction by 2010. If it does not, oil will continue to dominate economic and geopolitical arenas, as it has since the 1973 oil embargo. This may be the year the cap-and-trade system becomes ...