Where the best and brightest see things headed in 2004.

With the stock market coming out of a three-year coma and the economy in the midst of what looks to be a notable turnaround, most advisors want to know: What now? Is this really a full-blown recovery? Or just a short-lived reversal of fortunes, propped up by a wide array of artificial stimuli?

To find out, we asked some of the best and brightest minds working in the advisory, brokerage and investment management fields what they see happening in 2004. With a string of economic indicators that includes a scorching third-quarter growth rate of 7.2% and a surge in employment, many of the experts we interviewed for this story believe that the U.S. stock market is destined to turn around for some period of time.

But the real question is for how long? The extent of experts' optimism-whether it's Lincoln Anderson, chief investment officer at LPL Financial Services, or investment advisor Judith Shine, who manages $300 million in client assets-is mixed. While some economic watchers believe the real story yet to unfold will be rising inflation and interest rates, which are likely to flatten any real stock market gains, others believe that U.S. productivity will continue to set the stage for strong stock performance for years to come.

We decided to let the folks in the know tell their stories themselves. Without further delay, then, here is what our experts have to say about the economy, interest rates, the stock market and even impediments to investing success going into the new year. Where applicable, we asked them to put their money where their mouths are and show you their actual returns.

Expert: Judith A. Shine, President

Shine Investment Advisory Services, Englewood, Colo.

Years in profession: 18

Assets under management: $300 million plus

Claim to fame: Enviable client retention. "I think I've lost maybe eight clients in 18 years, and only one was to another advisor," says Shine. She's also been on Worth's list of top advisors since its inception a decade ago.

Economic outlook: "I feel pretty bullish because I think some recent incentives, especially income tax cuts, are just huge. There's an enormous tide of prosperity coming at us, provided the Fed doesn't mess it up and allows rates to gradually adjust to their historical levels."

Interest rate outlook: "I think the real story here is, what do you do on the fixed-income side for clients? I'm not worried about inflation, but I don't think we can keep rates below 4% and stay competitive. The point is we're at an extreme with bonds, and it's always difficult to call the turn."

Stock market outlook: "I see 50% gains over two to five years. We're halfway there, so I think we'll see another 25% gain. We're projecting 7% to 9% returns going forward." Recommended asset allocation: "We're overweighting international and emerging markets within our stock allocations. With the wave of devaluation and cost-cutting, we think Europe and Pacific minus Japan are pretty attractive."

Favorite investments: "A very broadly diversified portfolio. It's so true that you can run, but you can't hide. Now you can't even run."

Performance as of October 31, 2003:

YTD: 22.9%

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