Hawaii investment experts aren't expecting too much from the U.S. stock market in 2010.

Then again, they didn't anticipate too much last year either, and the three major indexes posted total returns ranging from about 23 to 45 percent.

So with that as a backdrop, four local stock experts are back at it again for the ninth annual Star-Bulletin survey of best investment ideas.

Barry Hyman, vice president-managing team for the Maui branch of FIM Group Ltd., will seek to defend his title after an impressive 125 percent gain in his hypothetical $20,000 portfolio. That's heady stuff for a self-proclaimed value investor, who calls the overall market fully valued and expects a lot of churning this year but little, if any, forward progress.

He said if there's anything that was proven in the last two years it's that passive investing in diversified index funds is “;a loser's game during volatile periods.”;

“;While 2010 will likely have little upside for the major U.S. market indexes, there will be lots of money to be made both in the U.S. and, especially, overseas by astute investors through selective investing,”; he said.

Hyman is joined once again in the contest by Kauai's Norm Caris (up 97.9 percent in 2009), managing director-institutional sales for Caris and Co.; Richard Dole (up 37.8 percent), chief investment officer of Honolulu investment adviser Dole Capital LLC; and Dwight Melton (up 29.5 percent), co-founder of the Hawaii Stocks and Options group.

The participants may have long or short positions in the investments they recommend.

“;Selection is key,”; Hyman said. “;Just investing in entire markets or sectors 'dumbs down' portfolios. Each sector will likely have winners and mediocre performers. Investors need to own the well-managed undervalued winning companies in these sectors.”;

Hyman said the best sectors to invest in this year are health care, energy, food/agriculture and companies that benefit from the emerging economies of Asia, east Europe, Africa and South and Central America.

In his portfolio, he repeated one of his picks from last year, Hong Kong developer Cheung Kong Ltd., because “;the growth story of China's economy is still firmly in place.”; Hyman also selected Warren Buffet's Berkshire Hathaway Class B, which split its share 50-for-1 on Thursday; as well as Barrick Gold; iShares Barclays U.S. Treasury Inflation Protected Securities Fund; and Cohen & Steers REIT & Utility Income Fund.

Among Caris' picks, he took a short position in Honolulu-based Alexander & Baldwin, meaning he'll profit if the share price drops.

“;The Hawaii economy is still falling apart and Alexander & Baldwin has massive exposure to real estate, particularly on Maui and Kauai, where the fallout is the worst,”; Caris said.

Caris also selected Bank of America, citing the market share it's gained by the demise of some of its competitors, as well it being able to benefit from low interest rates and the resurgence in merger and acquisitions and other capital market activity.

He also picked his longtime favorite, Hawaiian Airlines parent Hawaiian Holdings, as well as two technology plays, Intel and little-known Powerwave, a wireless equipment manufacturer that was trading at $1.26 at the start of the year.

“;The stock (of Powerwave) was left for dead but will benefit from a resurgence in build-out of wireless networks as smart-phone applications become more bandwidth intensive,”; said Caris, who thinks that tech overall has formed a strong basis for recovery.

Dole stuck with companies that he's selected in the recent past. He chose Brazil-based iron ore producer Vale SA; pharmaceutical giant Pfizer; Honolulu-based Territorial Bancorp, parent of Territorial Savings Bank; Newport, a supplier of scientific and technical instruments; and Alexander and Baldwin.

Unlike Caris, Dole expects A&B to have a better year.

“;I am looking for improvement both in its ag sector, and the general Hawaii economy,”; Dole said. “;With its relatively low cost of capital, the company can take advantage of opportunities in its real estate sector.”;

Melton, a growth investor, picked stocks that more than doubled last year. His choices were Western Digital, a memory device maker; Bucyrus International, a mining equipment maker; coal producer Alpha Natural Resources and Internet giant Google.

“;I think modest growth will be the rule in 2010, as we transition from a tentative early recovery highlighted by high-profile slumps in housing and employment to a more mature and more inclusive phase of the evolving up cycle,”; he said.