If November left you feeling whip-sawed when a “market correction” (a term used when the markets drop more than 10 percent from their recent high points) one day was followed by a sharp upturn a couple of days later, hang on. It’s probably not over yet. Wall Street experts believe that stock market volatility will continue in the year ahead, thanks to a sluggish economy. But it’s not all doom and gloom, and many market gurus see bright spots and opportunities ahead. Here’s a synopsis of some of the major viewpoints:
- Stock prices will continue to be buffeted by market turbulence. In times of uncertainty, investors tend to react more –perhaps overreact—to news whether good or bad. In times like these, experts urge investors to take a longer-term view, to be patient and stay in the game.
- Concerns about the economy—about surging oil prices, the long term affect of the recent crisis in the credit markets and a weak dollar that sunk to an all-time low against the euro in October—are real, and the economy is expected to be sluggish for at least the first quarter of 2008. Few experts believe we will face a recession. That declining dollar --that may have stymied your plans for overseas travel in 2008-- has created a greater demand for U. S. exports and the ensuing boost to the nation’s trade balance has helped keep the nation out of a recession. Evaluating all key factors, many experts believe that, some time in the second quarter of 2008, we’ll see a return to a modest rate of growth (under 3 percent) in the year ahead.
- There will be opportunities for savvy investors—but the best returns will go to those who do their homework. Every situation creates opportunities, and the factors that will hold U.S. economic growth back create real potential for certain sectors and specific types of businesses.
- Different gurus have their favorite best bets—companies that might out-perform the market average in 2008. As always, these ideas are no substitute for an investment strategy tailored to your needs. Consult your investment advisor to get the best and most appropriate advice for you. Here are a few suggestions from key players that may be worth consideration:
- Large-cap growth stocks that have significant overseas earnings with which to offset any earnings slow-down in the U.S. Experts note that stock prices for some of the most respected blue-chip companies are at bargain basement prices.
- Technology stocks –especially companies that are unlikely to be influenced by the conditions that may hobble other sectors – factors like tighter credit and soaring energy costs.
- Companies involved in providing services to the energy industry—perhaps civil engineering firms or construction companies with the global reach to capitalize upon the energy industry resurgence.
- Consumer companies that derive a high percentage of their revenue in non-dollar currencies. Think of the fast-food chains that proliferate in Europe and beyond, and the apparel brands that appear to be the choice of young consumers world-wide.
No one knows what’s in store for 2008, but we can be sure that discipline, perseverance and patience are assets that every investors will need in the year ahead.