The twelve key investment trends of 2007

From a US house price collapse to to a dollar rally, Forbes regular Gary Shillings predicts the key economic trends of the year - and advises how they will affect your investments.

What's ahead for stocks and the economy in 2007? Setting aside unknown elements like major terrorist attacks or natural disasters, I believe six phenomena are shaping the investment climate this year. The world is awash in financial liquidity mainly due to rising house values, the negative US corporate financing gap and the American balance of payments deficit.

Inflation remains low despite higher energy prices. As a result, investment returns are low. Speculation remains rampant despite the 2000-2002 bear market. So, investors are accepting more risks to achieve expected returns. And then there's the insatiable US consumer, who, thanks to the booming housing market, continues to spend freely.

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