Investors, Make a Run for the Borders

Focus: STOCKS

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

If the US market has you stumped, take a close look at Mexico and Canada. Some key stocks in those nations could gain whether the US economy perks up or not, writes MoneyShow’s Jim Jubak, who also writes for Jubak’s Picks.

The crosscurrents in this market are enough to give you a headache.

May I suggest that you take two stock markets—those of Mexico and Canada—and call me in the morning?

The Baffling US Market
If you look only at the US stock market, you see a confusing mix of short-term strength and long-term weakness. And you are left wondering, day to day, which one investors will choose to emphasize.

On the strength side, the US economy is growing faster than any other economy in the developed world. The year-to-year growth of 2.8% in the fourth quarter looks great when you compare it with a stagnant Japan and a Europe that’s headed toward a recession this year.

But on the weakness side, as Standard & Poor’s reminded investors Wednesday, the United States still hasn’t begun to deal with either its current budget deficit or the long-term trends feeding that deficit.

The credit-rating company, which downgraded the United States to AA+ from AAA on August 5, warned that the United States faces a one-in-three chance of another downgrade within the next six to 24 months.

Strength side again—the Dow Jones Industrial Average is flirting with its May 2008 high, and is within a 10% rally of its all-time high of 14,164.53 set on October 9, 2007—when Lehman Brothers still existed and the government didn’t own a piece of either General Motors (GM) or American International Group (AIG).

Weakness?