The first three weeks of January have been strong in the markets. Though corporate profits rose strongly in 2011, markets had a difficult time. Corporate profits are continuing to rise in January, and so are markets. The turning point is that countries like Spain, Portugal, Italy etc have been able to sell government bonds at lower interest rates than in the second half of 2011. Investors are starting to gain a little confidence that the government turnaround plans show some promise. No one thinks we are “out of the woods” yet, but there are signs that government deficits are peaking and starting to fall. This is very promising for markets as corporate profits continue to increase.
David Rosenberg, who is always negative, and admits it in the attached article, is actually showing signs of enthusiasm for stocks. He feels that this could be a good time to continue to invest into good companies that are paying dividends. Markets so far are proving that the hypothesis is credible. Long term investors are always rewarded.
