Motley Fool member NICKDAWG had a very interesting and opinionated post on the site's popular message board, the Liquid Lounge. The post, which can be found here, listed the member's 10 predictions for 2008. In my opinion, many of his thoughts are very logical and worthwhile. I'd like to focus on a couple of his points (bold-face) in specific, though:

Do not buy any "dips" in houses or real estate

I think that for most retail investors, avoiding real estate (especially in the first half of this year) is a very smart decision. Don't be a hero and try and catch the bottom in these stocks. It's simply not worth the risk.

Sell consumer oriented issues. Don't "bottom fish" in the financials. Favor high quality, special situations with strong balance sheets.

In my opinion, bottom-fishing financials in the late first half of this year should prove to be a low risk, market-beating opportunity. Many of the financials that have been marked down in the most recent downturn have almost no risk of going bankrupt. I think buying many of these stocks now will prove to be a smart decision several years from now but I do believe that many of them haven't yet bottomed. I am going to post about this in coming weeks.

The Dow plummeted 221 points on its first trading day of 2008. Since nobody who knows what's moving the market on any given day will talk to the media, we are left to guess why it fell today. Four possible reasons:

• Bad news on the manufacturing front as the purchasing managers' index declined to 47.7 from 50.8
• Oil broke the psychologically painful $100 a barrel barrier due to a drop in supply and lingering geopolitical fears -- from violence in Nigeria to instability in Pakistan
• Gold hit a recent record of $860 an ounce
• The Dollar tumbled as the Euro rose to $1.47

Do any of these explanations account for the decline in the Dow or is it just portfolio managers taking some profits after clearing off some window dressing they took on so they could report to shareholders that they owned stocks that had done well in 2007?

I don't know the answer but reports I've been reading today suggest that there are tens of billions worth of bank write-downs and thousands of bank layoffs in the works. If a credit crunch is in the cards and oil prices keep rising, I think foreign oil stocks might be the place to look for investment profit in 2008.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

What does the coming year hold for the economy? BloggingStocks' Peter Cohan considers five issues that will factor heavily in 2008.

2008 is an election year in the U.S., which means that nothing significant is likely to change in terms of government policy. The one wild card in that assessment is whether the Bush administration will go to war in Iran – or take some other radical policy move -- since it knows it has very little time left.

Assuming nothing significant changes, the biggest economic story of 2008 is likely to be the repercussions from the deepened collapse of the housing market and all the credit markets that plunge in its wake. There are no firewalls in place to keep the drop in CDO, MBS, and SIV values from spreading to the entire global financial system.

The question is whether the U.S. policymakers will be able to do anything effective to stop the damage.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

What does the coming year hold for the economy? BloggingStocks' Peter Cohan considers five issues that will factor heavily in 2008.

Sovereign Wealth Funds (SWFs) are estimated to be between $2 trillion and $15 trillion. That's a wide range, but even at the low end, it's a lot of money. The SWFs are potentially economic and political Trojan horses. They are using the current problems in the credit markets as a chance to buy stakes in U.S. banks for relatively paltry sums. It remains to be seen whether they are getting in at the bottom or whether they're foolishly buying in way too soon.

However, if they get big enough stakes in strategic industries in the U.S., they will be in a position to influence U.S. policy. For example, if the funds do not like U.S. Middle East policies, they can threaten to withdraw their capital. If that capital is hard to replace, the U.S. will find itself needing to choose between imperiling the survival of its banking system or changing its foreign policies.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

What does the coming year hold for the economy? BloggingStocks' Peter Cohan considers five issues that will factor heavily in 2008.

Stagflation -- high inflation coupled with weak growth -- is a risk. The latest inflation statistics suggest that inflation is running at a 4.2% annual rate. That's way above the 1% to 2% range that then Fed targets. And by cutting rates, the Fed is contributing to inflation. Energy, food, metals, and other commodity prices are rising due to demand from China and India. But the Fed contributes to the price increases because oil prices are denominated in dollars. When the Fed cuts rates, the value of the dollar drops and the price of oil rises, so inflation is certainly going to rise.

The question remains whether the economy will slow down or whether the stimulus from lower rates will keep it growing. My hunch is that the key to economic growth will be the availability of credit for consumers and businesses. As long as U.S. businesses can get enough capital to keep growing and meeting demand from China and India, they will keep people employed. The weaker dollar actually helps the competitiveness of these U.S. exporters since their goods are cheaper in the international markets compared to those of European manufacturers, whose prices are denominated in more valuable euros.

And as long as people remain employed, they will be able to use their credit cards to keep buying things.