NEW YORK (CNN/Money) - After advancing steadily from late November through the first week of January, stocks have sold off over the past few days -- and don't be surprised by more small setbacks over the next year as the economic recovery fully takes hold.

Investors still have little confidence in the recovery and perpetually have one foot out the door. The result is likely to be a series of brief bouts of profit taking every time there's a wisp of bad news on the horizon.

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Now that earnings-reporting season is coming up, investors have begun to worry about the potential for unpleasant surprises. There are sure to be a few, but on balance, I expect that reports will surprise on the upside.

It's more important, however, to focus on cyclical and long-term trends. No one can successfully predict month-to- month or quarter-to-quarter market moves. Instead, you should concentrate on building a broadly diversified portfolio of superior stocks that are fairly valued at the time of purchase and that appear in step with the major trends.

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Any analysis of cyclical trends has to start with the fact that this is an election year. The stock market posts subpar gains, on average, during the first two years of a President's term. The biggest gains tend to be in the pre-election year, as the Administration tries to get the economy in the best possible shape before the voting. Election year itself is also above-average, but a little less robust.

That same pattern has played out this past cycle, except that the market posted outright losses in the first two years of Bush's term. Last year was a smashing success, more than double the average. And this year looks on track for solid double-digit returns.

For the long term, there are three important factors to consider. First, in the wake of a horrendous bear market, stocks are due for a sustained period of recovery. Second, low interest rates and the falling dollar will stimulate a rebound in inflation over the next three years or so, which could materialize quite suddenly.

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The third important factor is that resurgent inflation and political risks could greatly increase investors' interest in energy stocks that have most of their reserves in North America.

On those grounds, I find Anadarko Petroleum a particularly compelling stock for long-term value investors. It's also a good diversification choice for growth investors looking for an inflation hedge.

Anadarko is a leading producer of oil and especially natural gas, with more than three-quarters of its reserves in North America. Recently, many energy companies have been trimming their reserve projections. But Anadarko's holdings are so extensive that analysts figure the current share price undervalues the reserves by at least 10 percent.

Not too long ago, Anadarko has had a poor record of finding and developing new reserves cost-efficiently. But last year, Anadarko actually found reserves at well-below-average costs. And the company's new CEO James Hackett is expected to keep the focus on cost-efficient exploration.

Earnings will be off this year, but even on those results, the $52 stock trades at only a 12 P/E. Cash flow is so strong that the company can boost its reserves per share more cheaply by repurchasing its own stock than by drilling.

For that same reason, Anadarko is rumored to be a takeover target. The company would also be a likely beneficiary if the stalled energy bill is revived after the election. Two major brokerages have upgraded the stock since October and it remains a top choice among value-oriented investors.

Michael Sivy is an editor-at-large for Money magazine. Sign up for free e-mail delivery of Sivy on Stocks every Tuesday and Thursday.