Top 10 Stocks to Own for the Rest of the Year

Editor's note: This column was submitted by Stockpickr member Fred Fuld, of Stockerblog.com.

First the bad news. If you think the residential real estate market is bad now, just wait -- it will get far worse.

Here's my take. Middle-class borrowers with loans that started out with teaser rates are also suffering. The inventory of homes -- the number of houses on the market -- is enormous and sales have been dropping in most of the "hot" real estate markets, even during the summer, when sales are supposed to be good.

Politicians will probably pass laws to severely limit the number of subprime mortgages in the future, eliminating no-equity loans, 125% loan-to-value loans, low teaser-rate loans and the like. This will drive a stake through the heart of the real estate market, destroying the potential for the working class to buy starter homes, eliminating the move-up real estate market as well as any possibility for subprime borrowers to refinance.

Any real estate investors who start looking for bargains in the real estate market now will get burned, making the market worse and stoking the fires in the news about the real estate catastrophe. Even if the Federal Reserve eventually lowers interest rates, it will do almost nothing to help the real estate or mortgage market (unless it drops rates to 1%).

A few major hedge funds probably will go under, and at least one major investment firm will experience severe problems prompting either its collapse or a forced takeover. There will be a lot of talk from politicians about more regulation of hedge funds, but nothing will be done. They will realize that it was primarily the wealthy that lost money in them. The press will have a field day with hedge fund problems, blaming the weakened economy on the wealthy for investing in such funds in the first place and implying that the wealthy deserve what they got.

In addition, more mortgage companies will declare bankruptcy and at least one major homebuilder will go under. The stocks of investment brokers, investment bankers and banks will languish despite their favorable yields and ratios, at least for the next couple of months and probably for the rest of the year.