Geoff Cutmore, news presenter on CNBC

Many investors will decide not to commit money to stocks because they don’t believe corporate revenues can grow in this environment. They question whether companies can show cash flows with double digit or high single figure unemployment rates. But investors must see through the noise says Peter Toogood from Old Broad Street Research.

“We will fixate on the jobs number and the hunt for evidence of GDP growth - but it’s not GDP that drives stocks for stock pickers. Let’s leave the economists to their data and instead focus on which companies can thrive in this environment.”

Mark Tinker, an equity fund manager at Axa Framlington believes equity markets should outperform this year. “Retail investors shouldn’t get hung up on the growth story, but should remember why they are buying stocks; companies are about profits not about jobs, don’t forget this as you invest in 2010.”

So how do you apply that to your investment strategy this year? Tinker says it’s about excluding those sectors with limited prospects this year, and deconstructing company supply chains, after all one companies spending represents another company’s revenues or profits. He is light on UK retailers and consumer focused companies as consumers continue to pay down their debts.  Understanding the supply chain is critical he believes for identifying the best parts of a sector to own. For example, in the mobile phone segment he largely ignores the service operators in favour of component manufacturers in Asia which supply parts for the handsets. He believes they will make the better profits.

Tinker says if you can invest globally don’t limit yourself to developed world stocks when Asia and Latin America offer more attractive markets.

Bob Parker agrees, but adds a note of caution about prospects for the full year,“ there is a risk in late 2010 or early 2011 that the equity market rally in developed markets fails with markets going through a medium-term period of broad stability.” but, that is something to worry about later on in the year and investors shouldn’t lose sight of the opportunity now because they are worried about a double dip slowdown and weaker profitability.

Peter Toogood says the obvious trade for the risk adverse equity investor is to buy large cap high quality names. As an asset class they underperformed in 2009 and as a result many of them still offer the potential for capital gain this year, and better than cash dividend yields. They also offer the psychological advantage of being a trusted name even if the negative noise around the economic recovery becomes louder and less harmonious.

Geoff Cutmore, news presenter on CNBC