• The global economic recovery is well established & is accelerating. The outlook for 2010 is for robust aggregate global economic growth expanding into 2011.
• Rising global prosperity will support corporate profitability.
• Synchronous global growth increases demand for most Commodities.
• Economic recovery in the USA may exceed broad expectations. 
• Despite the power of 2009 sharemarket rebounds, history shows such bull-markets usually extend into a second year. (For Kiwi’s, 2009’s boom in local currencies was substantially offset by the rise in our NZ$ reporting currency).
• Sharemarket gains are likely to be gentler in 2010, but this outlook also carries less risk. January’s market swoon may be typical of ‘corrections’ punctuating an overall respectable level of market gains in the coming year to 18 months. 
• Values and the economic backdrop, both greatly favour Equities as an Asset Class over Bonds. There is no scarcity of new Bond issues.
• Government spending is out of control (therein may lie the seeds of the next Bubble). Resentment of government activism, expansion and intrusion is already manifesting some places. 
• Copenhagen marked the peak of Global Warmongering. NZ’s cap-and-trade legislation will be a quaint outlier.
• As ever, the future is not knowable. Even the best strategy deals with probabilities only. Systematic diversification, in accordance with Modern Portfolio Theory, remains the best approach to managing ever-present risks & uncertainties.
• Tactical asset allocation – favouring those aspects expected to perform best, while shunning those perceived to be over-priced – adds value.
   
   
  
  
    

Norman W. Stacey (n.stacey@diversified.co.nz)
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