During the 4th quarter of 2009 and 1st quarter of 2010 many pundits saw signs that the economic recovery might accelerate and form the V-shape for which many were hoping. Our analysis, as many of you who receive our newsletter, have spoken with us personally or who read our articles knew, was not optimistic.

With the release of the July Non-Farm Payroll Report we received further confirmation that the economy is not going to provide the acceleration needed to put the vast numbers of unemployed back to work any time soon. Most of the economic reports that we have received for the last few months have been disappointing and even the Q2 GDP will likely be revised down below 1.5% in our analysis (perhaps below 1%).

While we hate to write about doom and gloom, we do feel that transparency and honesty are required to make good business and investment decisions. It is likely that the next few quarters will see further slowing in the economy. Why? Because the economic numbers we are watching look more like those of a slowing not an accelerating economy.

In our view this recovery won't be V-shaped, or L-shaped, but will look more like a jagged saw tooth where we have periods of growth; sometimes sharp growth followed by periods of low or even negative growth.

One of the reasons for this has to do with our acceptance of technology and measurement in business practices.

With an ever increasing capability to 'count and measure' through the use computers and wifi/RFID technology, we can now rapidly adjust inventory purchases and the personnel needed for both sales and manufacturing. The acceptance of technology has enabled us to tap into data more rapidly than most of us ever dreamed possible. This has enormous benefits but, the bumps along the way as we adjust to this could be harsh.

The stock markets have adopted and adapted this technology faster than anyone and the implications have been enormous. The May 6th 'Flash Crash' is an example of how the use technology can get ahead of the market and the regulators' ability to regulate the consequences of the ever increasing speed of transactions.

While it is likely that the economy will be choppy for years to come, as we work our way out of the deep credit issues from overbuilding, overbuying, and over leveraging in real estate (and yes, we still think it is a good time to look at buying a house) there are still many opportunities from both an economic and investment perspective.

While it is likely that the stock market will face major volatility, there are many good investments one can make. In order to be successful, an understanding of market structure and the speed of change is rapidly becoming a pre-requisite for profitable investment. Gone are the days when buying and holding for the long term guarantees success; there are just too many other factors affecting the valuation of a company these days.

So, while the economy and the markets will continue to be choppy, the reduction of personal debt and an increase in savings and prudent investment, like those in income-producing holdings, will help one ride out the storm.

Mark Stys is the Chief Investment Officer of Bluemont Capital Advisors, LLC. He and Dr. Harald Malmgrem recently authored an article for International Economy titled "The Marginalizing of the Individual Investor."