Saturday, January 5, 2008

Outlook for global stock markets.

Welcome to year 2008. I just came back from my oversea holiday. Let me wish you successful year 2008.

Year 2007 was quite nervous with high volatility especially at the end of the year. Credit market turmoils spread over. Also fear of US economy recession has pushed stocks lower. How to invest in coming year? I still like stocks but it's needed to be more selective than in last years as major stock markets indices will hardly beat past performances. During this month I'll publish some stocks which I will be adding to my portfolio.

For 2008 I don't expect US economy goes to recession. Consumer spending remained positive on year-to-year basis for 2007. And as labour market remains strong US consumers will keep higher spending. Plus global growth and weak US dollar are stimulating export. If we look at to US stock markets. Shares are with the cheapest valuation in this decade (P/E ratio for S&P500 is 18). I expect beginning of 2008 with continuing volatility but I see optimistic second half of the year as effects of interest rate cuts will be implied. Moreover there could be fiscal stimulus too, if White House tries to amp up growth ahead of the 2008 Presidential election. Index S&P500 has risen in the final seven months of every election year since 1950 except one.


1 Response to "Outlook for global stock markets."

Anonymous said... January 8, 2008 at 9:43 PM

Interesting thoughts. I hope your optimism is correct.

Best Wishes,