Market historians and optimists might be hopeful about the stock market in the coming months, even year.
Over time, midterm elections during the first-terms of Democratic presidents have brought stunning market rallies, on the assumption that the combination of a Democrat in the White House and a Republican-controlled senate often results in gridlock, which tends to reduce uncertainty for Wall Street.
If that is the case, US stocks in 2010 will almost certainly finish higher for the second straight year after a devastating 2008 and a down 2007. They might even manage a double-digit gain.
There's always the exception, however, and this year has brought more than its share for stocks: a red-hot July and September; a brutal, cold August.
What's more, given the health of the US economy—and the global one—as well as changes in the world of investing, there's ample reason for pause.
Demand and growth remain weak and debt high for both consumers and governments. The growing role of high-frequency trading and other institutional, computer-driven investing forces sometimes make technical factors as powerful as fundamental ones in moving stock prices.
Meanwhile, two years after the financial crisis and ten years after the great bear market, retail investors are feeling twice burned and very much shy about re-entering the stock market. Financial advisors these days seem to spend as much time on hand holding as they do actively managing their clientsportfolios.
There's growing talk of a bond bubble and a gold bubble in a safe-haven-obsessed marketplace.
For all the talk of a new normal, some may be wondering if it is more a matter of no normal. Do the same rules rules—diversification, buy and hold—and vehicles—mutual funds, single stocks—still apply? Is there a new calculus, physics to the world of investing?
It's against this backdrop, that we've assembled our annual our "Winterizing Your Portfolio" special report, addressing some of the nagging concerns and questions.
Analysis & Advice:
- Asset Allocation: Ride Stocks
- Diversification: Broken Rule
- Small Cap. Vs. Large Cap: Bigger Is Better
- ETFs Vs. Stocks: Powering Up
- Protecting Your 401(k): Self Interest