Finally, we are seeing some good jobs growth in the United States. Last week, the U.S. reported that there were 230,000 private sector jobs created in March, for an overall job gain of 216,000 when the loss of 14,000 government jobs is factored in. Many investors, including myself, have said on many occasions that when the American economy starts to generate sustained job growth, the economy and the stock markets would soar. However, even though we are starting to see consistent job growth out of the U.S. and Canada, retail investors still remain cautious about investing in recent high flying markets.
With so many positives in the North American economy, why are investors still so hesitant? Is this hesitation going to cost them in the long run, in terms of growing their individual portfolios? In my opinion, to not be in this market if you are a growth oriented investor is a mistake. I believe the investment environment to be great for individuals to grow their wealth. However this environment of low taxes, low interest rates and government stimulus programs will not be around forever. Factor in the recent gains in the labour market and you have the makings of an almost ideal situation.
Many clients have asked me about political issues around the world, such as the unrest in the Middle East and it’s effecting on oil, the catastrophe in Japan and European debt issues which seem to have resurfaced. My response has been that low interest rates and an accommodative U.S. Federal Reserve pumping money into the financial system trumps these negatives over the long term. No matter how bad the media headlines may be, this market is choosing to take its lead from company fundamentals and corporate profits.
Recently, we have been hearing rumours about the Fed raising interest rates a lot sooner than was anticipated at the beginning of the year, rumours I feel may come true in 2011 as the Fed will begin the slow process of raising interest rates. It has also been said by the U.S. President Barack Obama that at some point the U.S. would have to begin tackling its huge deficit, which leads me to believe higher taxes are on the horizon.
In Canada, the Conservative government hadn’t mentioned a tax hike before it was toppled in March, however we have heard from the Bank of Canada chief Mark Carney that the central bank would begin to raise interest rates in the not too distant future. Therefore, I believe the positive environment I write about so often will not be around forever, and as a growth investor, you must take advantage of the current opportunities before they are gone.
With this in mind, I continue to recommend investors consider investing in areas of the market that would benefit from global growth. Sectors of the economy such as agriculture, infrastructure, financials, energy and technology should continue to rise with global growth. These sectors have enjoyed good performance over the past few years and I believe that if the global growth story continues, these sectors will lead the charge forward.
If you have any questions regarding the above article or are looking for an investment adviser 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 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 or Metro Canada.