The turmoil in the European Union has brought havoc and chaos to the North America stock markets. The Greece debt crisis has been weighing on the minds of investors this past week, causing them to sell out of the market and become more conservative. Individuals are fearful the issues in countries like Greece can spread to other larger nations, which could become a much larger problem for the broader markets.
Are all investors fearful and moving to higher ground? I do not believe so. The average investor, in my opinion, is actually not doing anything at all. In fact, I believe most savvy investors are buying into this market at these levels while the traders and technical analysts with their computer models sell out, driving the market even lower. So in the meantime, the fear that is talked about, in my estimation, is being acted upon by the institutional investor and not the retail investor.
Is the sell off we are experiencing in the market justified? In my opinion, I believe the sell off to be overdone at this point. By no means am I belittling the problems in Europe, but I do not believe there is any evidence at this time that the debt issues could spread. Spain, another country that has been talked about as having possible debt issues, just reported positive growth numbers (GDP) and has had a successful bond offering to raise capital in the last week -- two positives for a country that is having possible debt problems. Investors that are selling are ignoring the general positives in the North American markets. In Canada and in the United States, we are now seeing positive job growth, companies reporting great earnings exceeding in most cases any estimates, and a consumer that seems to want to continue to spend their money. These are three positives for any economy, and the North American economy is getting better each month, seemingly well on its way to reaching a more normalized level.
So with these positives in mind, and a stock market falling as much as it has, I believe we as retail investors are looking at a great buying opportunity. In my opinion, if you are looking for growth, there are many individual securities that have pulled back to prices we have not seen for some time and represent good value. I think investors should look to take advantage of yet another opportunity in the marketplace and find good quality companies at good values.
– 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.