How resilient have the North American markets been over the past few months? Many investors and analysts have been speaking recently about how the stock markets in the U.S. and Canada have struggled this past quarter. I on the other hand look at it differently! I consider all the negative news and poor economic data from seemingly every corner of the globe and still our stock market is relatively flat for the year and the U.S. markets are much higher! What more as investors, could we ask for?
Why have our markets in North America faired as well as they have recently? I believe it’s because the world once again is awash with stimulus measures. For those central banks that have not yet begun to stimulate their economies as of late, (Federal Reserve in U.S.) many are anticipating them to do so shortly. We have seen in past years that when central banks from China to the United States, from Brazil to the U.K. all stimulate their economies, the global market reacts positively. This is the main reason why in my opinion, our stock markets have continued to remain resilient here in North America.
Another major factor why investors continue to buy equities (stocks) in the face of a global slowdown is that there are in my opinion no other options to grow your money today. With interest rates on GIC’s and bonds at or near historic lows, an investor looking to grow their wealth cannot consider these types of investments. They simply don’t pay enough.
With the earnings season just starting, it will be very interesting to see if the stock market can remain resilient and move higher. The expectations for corporate earnings have come down dramatically over the past month for the second quarter. Thus, surpassing analyst’s expectations may not be too hard however investors will need to look at how the company is doing in relation to its past quarters as well.
I continue to be positive on the markets. As many of you know, I like to look at the glass as half full not half empty. There are major challenges facing economies today that in my opinion won’t go away easily such as the Euro debt crisis, a slowing growth story in China and U.S. employment and housing issues. However I believe that there will always be storm clouds on the horizon. If investors wait for all the storm clouds to leave before they invest they may never do so. With interest rates low around the world and possibly going lower, I feel that today may be one of the best times to invest especially for longer term investors.