.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:225px; margin-right:10px; clear:left;} Financial expert Mike Ryan sees the U.S. economy heading into a slower rate of growth, and notes that this could result in some “bumps and bruises along the way.” But don’t worry, he says; you can still make decent returns on your investments.

Ryan is based in New York City, where he works as UBS Bank’s chief strategist for the individual investor. Jim Spooner, who works for UBS in Des Moines, says no other bank has a person with that job description. So it was a nice treat for local investors when Ryan came to town recently and shared his perspectives.

He spoke to UBS clients one evening and the next morning addressed a Rotary Club meeting at the Wakonda Club.

The bad news is that instead of the 3.5 to 4 percent growth rates we’ve enjoyed recently, Ryan says the U.S. economy is looking at something closer to a 2 percent growth rate in the near term. Because of the trouble in the housing industry “which we now believe is going be an extended pulldown,” Ryan said, “coupled with a debt-burdened and increasingly stretched consumer sector, we think the economy is transitioning to slower growth.”

However, he sees inflation coming down enough to persuade the Federal Reserve Board’s Open Market Committee to lower the federal funds rate.

“We believe in the second half of the year, the Fed is going to take the step of cutting rates,” Ryan said. “We expect in September they’ll begin, and by the time they’re finished, the Fed will have cut rates 150 basis points.”

OK, what should an investor do to prepare for the next few months?

Ryan says the stock market could continue to be a comfortable place. “Our view is that several things are going to support equity prices for the balance of this year and into next year,” he said. “The stock market is priced at about 16 times earnings, and that’s one of the lowest levels of valuation we’ve seen in a decade.

“I’m not saying that we’re going to see double-digit returns, but it’s unlikely you’ll see any material, sustained pullback in stock prices.”

When it comes to picking stocks, “the areas we want to be a little more cautious in are areas dependent on the consumer, like consumer discretionary stocks,” Ryan said. “We’re also cautious about telecom.

“We want to overweight areas that are less sensitive to a slowdown in the economy. For example: consumer staples, health care, financial services.”

You can’t have much fun being overly cautious, of course, and Ryan advised his listeners to be opportunistic, not purely defensive. Think about buying industrial stocks, for example. “Construction and the development of infrastructure is building tremendous demand for capital goods in East Asia, and that’s going to continue.”

Ryan isn’t overly concerned with the federal deficit. “Tax receipts are coming in much higher than expected,” he said. “The deficit is not a near-term threat to the economy; the bigger issue is what happens in 10 years with entitlement spending.”

But he is concerned with federal regulations. “Some of the restrictions we’re placing on small business, it’s staggering. We’re losing shares to foreign exchanges because they don’t have the same regulatory burdens we have here,” he said. “We should roll back some of the regulations with good intentions but bad outcomes.”