The retail giant lowered their earnings expectations for 2009 in a recent statement. Expect Wal-Mart to pass along that pain to their suppliers. Wal-Mart is widely panned by suppliers for walking their prices down until suppliers barely make any profit. While that may mean lower prices for you, it means that many of these suppliers have no safety margin when tough times hit. If we were to look into a crystal ball and try to see the future, we would predict that a number of those suppliers who rely on Wal-Mart's orders will be facing bankruptcy this year. Wal-Mart's strict control of their supply chain will likely see them reducing inventory levels and paring down marginally performing items.

While many Wal-Mart suppliers use outsourced manufacturing in China, many are based in the US and the failure of these companies will mean the loss of more US jobs. Our prediction of the near future also suggests that this summer of 2009 will see the worst economic conditions that many Americans have ever seen in their lifetimes. Prepare as best you can by retiring as much debt as possible and setting aside cash reserves (in an FDIC insured account, of course). While many stocks have been battered to levels that would make them bargains in better times, it is probably best to "stage in" buying at this point.

There are a few good stocks out there, but if you're good enough to find them you knew that already. Generally, these will be undervalued dividend payers with strong histories of maintaining or increasing dividends through many business cycles. However, for the most part expect the markets to continue downward or sideways for the foreseeable future. Bottoms may not be in yet, though we may see a small bump in the early days of the Obama administration due to the optimism many feel under the new leadership.

Author: Brad Sylvester