Over the past 50 years, the stock market has performed relatively well for investors. Several months ago, however, stock analysts projected that through 2010, the stock market will not provide the results that it has traditionally delivered. Over the past few years, new issues have cropped up that affect the stock market: terrorism, a nervous global economy, war in the Middle East, low interest rates, bankrupt Fortune 500 companies with a flurry of accounting mishaps, and a slowing business environment due to the overheated economy in the late 1990s.

These factors have left Americans scratching their heads, wondering where to invest their hard-earned money. The lack of faith in corporate America has led many to the rules of yesterday: hard assets. This is taking shape in a few areas…homes and investment properties.

With the threat of terrorism and the sluggish economy, people are putting more money into remodeling their homes. The “cocooning” affect that was predicted by futurists Watts Wacker and Faith Popcorn, among others, IS occurring. People are investing in the homes by adding high-tech entertainment systems, designer kitchens, elaborate baths, enhanced lighting, and other amenities. Kitchens and bathrooms are still popular remodeling targets: the traditional rule of thumb for return on investment for bathrooms is between $2 and $2.50 for every dollar spent, while kitchens deliver approximately $3 for every dollar spent.

The other area that is attracting interest among my clients is investment properties. Some clients are purchasing multi-unit properties and living in a duplex, leaving one or two other units in the same building as rental income. It is a terrific way to build for the future, while keeping an eye on the tenants. Under this arrangement, some clients are planning to eventually convert the entire building into a single family home, which may provide for even greater value in the long run. (The law of supply and demand…on a comparative level, SFHs aren’t being built as much as condos in the city of Chicago).

Another angle taken by some clients is that they are purchasing rental units in areas that are gradually upscaling. Over time, they will have the option to perform a condo conversion. In the near term, owners can update the electrical, plumbing, and other wiring in the building, and build out a unit at a time with higher-end fixtures geared for the condo buyer. This plan also works well from a budgetary and spending perspective.

My mother was born in Missouri —- the “Show Me State” —- and I’m beginning to think that people want to actually see where their money is going, rather than watch it potentially vaporize into another Enron, WorldCom, or Tyco. Hmmm…perhaps it is about going back to the basics.