The stock market is a complex machine that takes many factors into account. Among the most significant are psychological factors. With 2009’s low stock price levels, the bulk of mutual funds that experienced mass redemption in 2008 are gaining confidence, figuring this may be the end of turbulence.

This positive attitude is self-fulfilling: Money Managers will begin to deploy hard kept cash reserves and pump up undervalued stocks. A herd mentality will kick in and an onslaught of mutual fund companies will follow suit and inject cash into stocks so they don’t miss the stock market boom in 2010.

However, a factor that could slow stock markets in 2010 is the still looming credit collapse. Credit for so long was the steroid that pumped up companies to disproportionate levels. The era of easy, fast credit is over and thus a new era of internal capital investment will reign.

Because internal capital investment is fueled by income a company generates and its cash flow, investments will be conservatively planned and pursued and thus growth will be slower. 2010 stock market performance will fall in line with future gradual growth of corporations. As Warren Buffet put it: “The party is over”