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Most would deny it, but brokers are a superstitious lot. Perhaps it was the 22nd anniversary of Black Monday on Oct. 19, but October is regarded as a spooky month. As always, opinions are divided on what the future might hold. Many market experts continue to regard recent economic data with guarded optimism, while others remain resolutely bearish. As the year draws to an end, hereÂÂ’s what some leading commentators are saying.

Return to Equities

Over the past few months, U.S. investors have leapt back into the stock market faster than experts predicted. Their return was spurred by positive third-quarter earnings reports and the psychological boost caused when the Dow Jones Industrial Average passed 10,000 for the first time in a year. Investors are returning to basic pre-crash principles: keep most of your retirement savings in stocks and rebalance your portfolio with help from professional tax and financial experts at least once a year. Pay special attention to the economic performance of various sectors and determine the right mix of non-U.S. stocks, bonds and other financial vehicles.

Things are not exactly like they were before the crash, though. Alongside conventional wisdom, a new set of ideas and philosophy is emerging.

• The economy remains fragile. There are indications that growth is increasing, but there could still be big bumps in the road ahead.
• Experts donÂÂ’t expect a return to double-digit gains anytime soon.
• With less return on investment, reducing investment costs is crucial. Investigate what your mutual funds are really costing you.
• Consider low-cost index funds or exchange-traded funds as replacements for poorly performing managed funds or those with above-average fees.
• Diversification remains important, but consider lower-risk fund options.

Factors to Watch

Not all brokers have revised their bearish sentiments. Some caution that the market is running contrary to economic performance data; earnings only look good because of government stimulus dollars. They fear that all weÂÂ’re seeing is a short-term rally in a bear market - a brief respite after a devastating downturn. These cautious investment professionals cite the job market as a continuing problem and believe that consumer spending will be curtailed for some time. Increasing budget deficits and federal and state spending worry them, too. Unlike other downturns since World War II, the recent slump affected high-end consumers and as middle-income earners. Due to its wide-reaching impact, some bears believe that weÂÂ’ll see low gross domestic product growth for several years and lower annual returns on investments.

Many Wall Street experts expect global economic growth will begin overseas and that domestic consumer spending will continue to decline as shoppers tighten their belts. They predict low interest rates through 2011, with high rates of unemployment persisting through 2010. The expectation is that consumers in emerging markets will be the ones to fuel the global economy with newly minted discretionary income being used to buy smart phones, flat-screen TVs and PCs.

Whether pessimistic or optimistic, pundits agree that employment is the key. Improvements in the job outlook are crucial to long-term economic recovery and sustained market growth.