Has the tide finally turned for stock markets around the world? When you see the U.S. central bankk, the Japanese central bank, the Swiss central bank, England’s central bank and the European central bank all come together to provide liquidity for the European banking system, I believe this may be the turning point in the crisis in the Euro Zone.
Investors have realized that North American markets have taken their cues from Europe over the past few months. If the European markets are relatively calm when we start trading in the morning then it is possible the U.S and Canadian markets will have a good day. Any negative news releases or negative rumours before we start our trading day could be disastrous.
With this in mind, it is no wonder that when the central banks came out last week and showed support for European banks, markets around the world moved higher on the news. In my opinion, it meant that one more fear lingering with investors had been removed.
I believe that the government leaders in Europe have finally realized they need to come together to shore up the uncertainty in the EU. Both Germany and France, the largest countries in the European Union, have confirmed that countries such as Greece will remain part of the EU. Both countries have continued to show their support for the union and continue to work on solutions to address their issues.
In the U.S., President Barack Obama has put forth his jobs bill to try and stimulate further growth. The Federal Reserve will meet next week to discuss what it can do to further stimulate the economy and get Americans working again. With all this stimulus and all this money attacking the problems both in the U.S. and in Europe, in my opinion, something is going to benefit and I believe it is the stock market.
Thus, if you are an investor today that is looking for growth, I maintain that you must remain in this market. I have said recently that I want investors to consider dividend payers as their primary focus. I still believe that there are many dividend payers that are very cheap right now. I would also consider some stocks that are trading with low P/E multiples (price to earnings) and that have a dominant market position in their sector. I have heard from a few analysts that barring any new disaster, we have seen the low point for the North American markets already this year. I agree with these analysts. I feel that with all that is happening in Europe and the U.S., this will set a positive tone for the fourth quarter and a positive end to the year.
If you have any questions regarding the above article or are looking for an investment advisor to help you with your portfolio, please visit my website at www.investmentadvisorgta.com. I will be glad to speak with you.
Allan Small is a Senior Investment Advisor with DWM Securities Inc., a DundeeWealth Inc. Company. This is not an official publication of DWM Securities Inc. The views expressed are those of the author alone and are not necessarily those of DWM Securities Inc.