NEW YORK (Commodity Online): The investing environment for the next 10 years won’t match the boom conditions of the 1980s and 1990s, but will be much better than that of the decade just ended, according to “10 Predictions for the Next 10 Years” developed by Robert C. Doll, Vice Chairman and Chief Equity Strategist for Fundamental Equities at BlackRock, Inc. (NYSE: BLK). Doll is forecasting annualized U.S. stock market returns of close to 8% for the coming decade. “Many investors want to forget the last 10 years, which featured the two worst bear markets since the Great Depression,” Doll said. “We’re not likely to see double digit stock returns in the coming 10 years, due to ongoing deleveraging and significant structural problems. But two disastrous market decades in a row is extremely unlikely as well.” U.S. equity returns will lead the developing world, outpacing those of other developed markets due to more attractive valuation measures, stronger secular growth, more shareholder-friendly management practices and more serious structural problems in non-US economies. Though stocks will likely record a positive decade, investors will need to cope with a larger number of recessions than they have over the past 20 years, as the frequency of recessions returns to a more “normal” level, Doll believes. He also believes that, in a global environment where emerging economies will lead world growth, China will continue to grow strongly as an economic and political force. Since the 1990s, Doll has published a series of economic and market predictions at the beginning of each year, addressing the state of the US and global economies, potential returns for equities and other asset classes, geopolitical developments and other topics that significantly impact investors. His predictions for the next 10 years recognize – in addition to the start of a new decade – many of the key issues of concern to investors as the global economy and world financial markets continue recovering from the near-depression conditions of 2008-09. Here are Doll’s “10 Predictions for the Next 10 Years” with his commentary. 1. U.S. equities experience high single-digit percentage total returns after the worst decade since the 1930s. Doll believes it is reasonable to assume that normalized earnings-per-share growth and P/E ratios for the S&P 500 over the next 10 years match their median rates since 1957, resulting in an S&P 500 Index level of 2,034 by the decade’s end (the Index closed at 1,102 on July 30th). That would translate into an annualized price gain of 6.2% and a dividend yield of 1.9%, for an estimated total return of 8.1%. 2. Recessions occur more frequently during this decade than only once a decade as occurred in the last 20 years. Over the past 20 years, the economy has entered recession once every eight years, compared with once every 3.8 years over the past 100 years. Doll believes that over the next decade, recession frequency will be closer to the long term average. “What investors have become accustomed to -- somewhat infrequent recession – is in fact abnormal,” Doll said. “Going forward, we will see a more normal occurrence of recession.” Recessions will occur more frequently because the current global recovery is not “synchronous,” due to broad debt and leverage issues. “US consumers are still burdened by high debt levels, the banking system in the developed world remains highly troubled and, as the European sovereign debt crisis shows, the globe is still subject to deleveraging problems,” Doll said. 3. Healthcare, information technology and energy alternatives are leading growth areas for the U.S. The healthcare, information technology and energy alternatives sectors of the economy are likely to experience significant innovation acting as key drivers for growth in coming years, Doll said. Healthcare spending levels will almost certainly continue to rise with the aging boomer population, Doll said. Advances in biotechnology, the rise in patient-driven research and an increasing move toward digital healthcare record-keeping are potential growth areas for the healthcare sector. Information technology’s impact will be broadened by the sheer growth of new types of computers and entertainment devices, advances in microprocessor speed and capacity, innovations such as cloud computing and the emergence of social networking tools as economic growth engines. Development of energy alternatives will be supported by increasing taxes on carbon emissions, Doll believes. “Energy innovation will be driven by the realities of supply -- such as diminishing coal availability -- and geopolitical issues -- much of the world’s oil is controlled by governments unfriendly toward the United States,” he said. 4. The U.S. dollar continues to be less dominant as the decade progresses. 5. Interest rates move irregularly higher in the developing world. Continued...

Source