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A downbeat outlook for next 6 months
By Daniel Rome Levine

CRAIN'S: How big an impact will problems in the housing and credit markets continue to have on the U.S. economy and stocks? CRAIN'S: How big an impact will problems in the housing and credit markets continue to have on the U.S. economy and stocks?

MR. BRADY: Housing problems will continue, and rising foreclosures will grab a lot of headlines. Rising defaults on credit cards could also spook investors. If you're walking away from your mortgage, why not walk away from your $25,000 in credit card debt? There's the risk that spending by U.S. consumers will slow because of these problems, and that would be a drag on the economy. The next three to six months should continue to look pretty bad. Housing problems will continue, and rising foreclosures will grab a lot of headlines. Rising defaults on credit cards could also spook investors. If you're walking away from your mortgage, why not walk away from your $25,000 in credit card debt? There's the risk that spending by U.S. consumers will slow because of these problems, and that would be a drag on the economy. The next three to six months should continue to look pretty bad.

The S&P 500 is down 7.8% so far this year. What's your longer-term outlook for U.S. stocks?
I've looked back to 1950 to see what happened after particularly slow starts like we're seeing now. There have been only two times when the S&P 500 has been down in both January and February and not rebounded at least 16% over the next 24 months. We're putting money into what we consider quality stocks right now and expecting good returns over the next three to five years.

What names do you like?
Vulcan Materials is down to ($68.26) a share from a peak of ($123.67) last year. It will benefit from increased infrastructure spending in the U.S. over the next three to five years. I also like Paychex, a payroll processor. When times get tough, small companies in particular outsource non-critical functions such as payroll processing.

FIVE TO BUY
Mr. Brady recommends the following stocks:
1. Vulcan Materials (VMC)
2. Paychex (PAYX)
3. Network Appliance (NTAP)
4. Chipotle Mexican Grill (CMG)
5. Accenture (ACN)