The stock market continues to climb the wall of worry, meeting the challenges in China, in Europe, higher unemployment and the ongoing housing issues in the U.S. head on, and still moves higher! There are times when the market sells off slightly giving ammunition to the “bears,” only to be followed by another run higher. This in my opinion is the anatomy of a bull market. The average bull market lasts about three to four years. Thus if we are in the midst of a positive run in the markets, investors should be looking to take advantage of it.
At the beginning of the year, China made it quite clear that they would do whatever it took to keep inflation down. They forced banks to reduce loans and increase cash reserves to try and slow down an economy that started the year red hot. Recently China has said that due to the rest of the worlds continued struggles, they would leave their stimulus measures in place so that their economy would continue to thrive. The World Bank, after hearing this, increased its growth targets for China this year and now expects the country to grow by nine per cent. If this forecast is correct, China, which has been the main driver of commodity and oil prices around the globe, will continue to provide ample opportunity to those countries and companies that sell to China to grow.
Sovereign debt in the European region has been another problem as of late. Countries like Greece, Spain and Portugal are on close watch by the rest of the world for their rising debt levels. Greece has been the No. 1 problem with debts coming due shortly and there being a shortage of cash to handle it. What seems to be happening now is that the rest of Europe (mainly France and Germany) along with the IMF has agreed to step in to help Greece and save the country from default. There have been many ideas put forth on how to save Greece and it appears as though a bailout package has been agreed on. Thus, for the moment, sovereign debt issues can be put aside.
The unemployment situation in Canada continues to get better with less and less people filing for E.I.. We are seeing job growth for the first time in many months. In the U.S., the President put forth his jobs bill which hopefully should speed up job growth in the United States. Right now, the jobs market seems to be flat lining. Fewer jobs lost, but not many gained.
Lastly, the housing market in the U.S. seems to be getting better. The government, along with that country’s largest, have implemented programs to keep more people in their homes and reduce foreclosures in the country. This is an ongoing battle, but it appears overall that things are slowly moving forward.
There have been many economic and world issues over the last few months. Many of them have worked themselves out or are on their way to being worked out, but the market does not seem worried. The indices in North America are moving higher. The rally in the markets has been called the “Tortoise Rally” because of its slow methodical rise. Nothing for now seems to be able to derail its climb higher. Thus with this in mind, it is my belief that investors should be taking advantage of it. If you don’t or wait too long, you risk entering the market too late, possibly at its peak, just in time for the next crisis to strike and to watch your investment fall. Investors must take advantage of the good times to be able to withstand the tougher times ahead as we all know that there will be market issues at some point in the future. For those looking for growth, sectors of the market that are outperforming and should continue to outperform would be the infrastructure, technology, commodities, oil and banking sectors. Investors need to be careful as not all investments in these sectors will outperform as many investments have already risen in value. Thus investors need to consult their advisor with respect to opportunities in these sectors to continue to capitalize and take advantage of the growth in this economy.
If you have any questions regarding the above article or are looking for an Investment Advisor to help you with your portfolio, please send me an email at asmall@dundeesecurities.com. I will be glad to speak with you!
– Allan Small is an Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company. This is not an official publication of Dundee Securities and the author is not a Dundee Securities analyst. The views expressed are those of the author alone, and are not necessarily those of Dundee Securities.
