2012: A rocky start to the year

I hope that you are doing well and are making nice plans for the summer ! While reading my article, you will notice that my opinion hasn't changed much since the beginning of the year.

Let's start with the positive side of things ! Most North-American public companies have published better than expected results in the five previous quarters. They are accumulating cash for investment opportunites and cleaning up their balance sheets. All this fares well for the stock markets in the medium term. Just a reminder that we "do not" invest in Greek debt and U.S. debt but in companies, and if the latter make profits, the stock market should, in time, behave accordingly.

In the mean time, the stock market does not seem to realize the good results and profits that have been recorded by companies because investors are focused on debt problems in Europe and the United States. Because most people fear the outcomes of those problems, consumers and companies are delaying spending, hiring and new investments until the geopolitical picture becomes more clear, predictable and stable.

I believe that no important decisions will be made by U.S. officials with regards to the deficit question before the upcoming elections in November. As for Europe, small steps are taken to find solutions for sovereign debt issues but evolution is very slow. For all of the above reasons, I believe (opinion) that North-American markets will end the year on a positive note but will be marked with a lot of volatility and a slow progression.

What else I am looking out for ?

This may surprise investors but it might be time to start looking at European markets more closely. With all the bad news they have had in the past 2 years, their stock market is attractively priced. However, I would wait after the French elections before I change anything on that front !

I hope that you have enjoyed my text ! Do not hesitate to contact me if I can be of any help.