Where To Invest For The Next 5 Years

With u.s. equities markets as volatile as ever, where do you go to find growth before the end of this decade? Our expert panelof money managers tells you what will be hot in 2010.

If you haven’t noticed, individual investors are traversing uncharted territory these days. With interest rates at historic lows, a falling national unemployment rate, and high consumer spending, one would think that the economic outlook for the country would be positive. But look a little deeper, and there are a number of issues that make this one of the most uncertain times for investors.

Increasing energy costs are driving the price of goods higher, placing pressure on consumers. Moreover, concerns about higher interest rates threaten to stall business expansion, inflated property values are causing worries about a housing bubble, and growing fears about terrorism have many investors spooked about placing money into the market.

While all of these variables could negatively affect the financial markets in the short term, over the long term the stock market represents the best opportunity for you to expand your portfolio at rates that outpace inflation. But with so many new challenges for the economy, how can an investor reap major gains in the future?

We assembled four of the nation’s finest financial professionals to discuss their approaches to long-term investing and to get their insight on which industries are most likely to have the highest growth rates from now until 2010. The members of our roundtable are Charles Payne, founder and principal analyst of Wall Street Strategies, a New York-based independent stock market research firm; Jeffrey Phelps, senior vice president and director of equity investments with Houston-based Smith Graham & Co., ranked No. 10 on the BE ASSET MANAGERS list with $1.9 billion in assets under management; Dawn Alston Paige, senior vice president and co-founder of Piedmont Investment Advisors L.L.C., a Durham, North Carolina-based firm with $750 million in assets under management; and Ken Johnson, vice president and client portfolio manager at Loomis Sayles & Co., a $60 billion asset management company in Chicago.

BLACK ENTERPRISE: How do you believe the market will perform for the rest of this year and next year?

Payne: I’m excited about where the economy is right now. I think that we have very steady, non-inflationary growth that definitely could fuel a real strong stock market in the year to come.

Alston Paige: We feel very good about the market. While we may hit a slow period, the Federal Reserve Board will probably be out of the market by the end of the year. Following that, we expect the market to do quite well for the next two to three years into the end of the decade.

Johnson: In terms of our outlook for the economy, I expect short rates to continue to rise. First-quarter gross domestic product was revised up to 3.8% and at that level of growth, the Fed has to continue to move toward a neutral policy, which they have indicated is in the three- to five-year range. So, for the balance of 2005, I think we are a little bit more optimistic, in terms of economic growth for the market, but more bearish in terms of Fed policy and yields.

Phelps: I’m optimistic

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