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The rising level of pessimism is making me optimistic
06/08/2010 2:45 pm EST
The pessimism about the global economy is so thick you can cut it with a spoon. And so many investors say they’re shunning emerging stock markets such as China, Brazil, and India that it’s clear to me that we’re approaching something like a bottom in those stocks.
The contrast with last January is remarkable.
Then a Bloomberg poll showed China as the favorite stock market in the world. Brazil came in second.
This quarter it’s the U.S. stock market in the lead with almost 40% of polled investors saying that the U.S. market presents the best opportunities in the year ahead. Brazil came in second at 29% with China third at 28% and India fourth at 27%. Russia, the fourth of the four BRIC economies, was picked by just 6%.
By the way, I don’t disagree with the assessment of U.S. stocks for the next six months. That’s why I added a dose of U.S. growth stocks to Jubak’s Picks in May. But now I think it’s time to look forward to the next market and to get set to buy in anticipation of outperformance by emerging market stocks not too far down the road.
According to the poll 42% of investors now believe that the global economy is deteriorating. Back in January the percentage was just 21%.
U.S. investors are by far the most pessimistic about the global economy with 58% saying the situation is worsening. Asian investors were the least pessimistic with only 35% saying that the global economic situation was deteriorating.
Investors across the globe picked the European Union as offering the worse investment opportunities in the world.
I’d have to say that I agree. I don’t see a reason to be a contrarian on Europe. Yet.
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