A TEMPORARY CORRECTION, from Bob Doll, vice chairman and chief equity strategist for fundamental equities, BlackRock

Economic data continues to suggest that the recovery should be sustainable. Business and consumer confidence levels have been increasing, and last week’s retail sales figures were better than expected. While unemployment remains high, the number of hours worked has been picking up, which should translate into an increase in incomes. All of this is not to say, however, that we are completely out of the woods.

The Greek debt crisis points out the fragility of the global financial system. While it seems clear that the European Union will stand behind Greece, the situation does reinforce the fact that deflationary pressures exist.

The high deficits faced by the United States are a potential cause for concern, but in our view, there is no reason to expect inflation to worsen significantly in the next year or two. Given the background of an improving economy, the Federal Reserve has been starting the process of preparing the markets for greater policy flexibility and, ultimately, tightening, but we believe any interest rate increases are still in the future.

Despite all of the macro uncertainty, corporate earnings continue to be impressive. At this juncture, we are about 80% of the way through the fourth-quarter reporting season, and about 70% of companies have posted better than expected earnings and revenues. The best-performing sectors have been technology and consumer discretionary and the worst have been energy, consumer discretionary and financials.

From a stock market perspective, our analysis suggests that the current period of weakness is corrective and not anything more severe. Looking ahead, the negatives include the fact that there has been such a strong upturn since last spring (which suggests that some potential positive news has already been factored in) and ongoing deflationary threats, such as what is happening in Europe. On the other hand, the positives include low interest rates, accommodative fiscal and monetary policies, strong corporate earnings and the start of improving labor market conditions. Our belief is that these positive factors should win out over the longer term. In the near term, our sense is that the sharpest part of the correction is mostly over, but that we may only be about halfway through in terms of its duration.

THINK GLOBAL, from Phil Maisano, chief investment officer and vice chairman, The Dreyfus Corp.

Some U.S. investors may simply invest too little overseas and are therefore missing out on opportunities to diversify. In 2009, a declining dollar benefited investors that bought overseas assets. While the prospects for continued dollar weakness are not as strong in 2010, international diversification is still important.

Investors that do go global gain access to industry leading companies and potential growth rates that may not be available domestically. For example, the steel industry looks to be a prime beneficiary of the infrastructure builds (and rebuilds) occurring in many countries. According to the World Steel Association, the top nine steel producers in 2008 were foreign-based and the U.S. industry overall accounted for less than 7% of the world steel production. U.S. investors seeking to access the steel industry’s future growth must look overseas to best capitalize on increased steel utilization. The same scenario persists in many industries. There are fewer reasons for investors to limit their choices to domestic options. The globalization of the investing universe isn’t reversing and investors need to start thinking globally about investment decisions.

Demographics also support looking overseas for growth. While the U.S. represents over 25% of World GDP as of 2008, the latest full year figures available, the U.S. represents just 5% or so of world population. As more of the world population rises from poverty, a larger percentage of world growth should shift overseas and U.S. investors should participate in these opportunities.

THE NEXT TEN YEARS VS. THE LAST TEN YEARS, from Stephen J. Huxley, chief investment strategist, Asset Dedication

A common theme in financial headlines over the past several months has been the fact that stocks lost money over the prior ten years. This was true for 2008 and 2009. From the end of 1998 to 2008, the S&P 500 returned an average of –3% per year, and from 1999 to 2009, it returned –2.7%. These are sad numbers for long-term investors, and advisors should be ready to provide perspectives to worried clients about the next ten years.

One fact that needs to be remembered is that 1998 and 1999 were the final years of the greatest bull market in history. At the end of 1994, the S&P 500 stood at 459. At the end of 1999, it had more than tripled to 1469. If you start from the highest of highs, is it any wonder that it will take a while before you can reach it again?