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09. 02. 12. - 15:00

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09. 02. 12. - 15:00

Clem Chambers - All the pointers say there is light at the end of the tunnel

PERMA-BEARS BEWARE: 2012 LOOKS BULLISH, says Clem Chambers, CEO of leading stocks and shares information website ADVFN.com and author of "101 Ways to Pick Stock Market Winners".

From a market perspective, rarely is the eternal pessimist – i.e the investor currently thinking the world is going to hell in a hand basket – correct.

On the other hand, things never seem to turn out quite as well as the permanently optimistic would have you believe.

Permanent "bullish" or "bearish" positions are simply not useful.

In investment, you must be able to swing from happy to sad. Doing so is essential if you are to be in phase with the market - and be right about your investment bias - more than 50 per cent of the time.

This can be tricky. You should be feeling bearish at the top of the market when everything looks great. Conversely, you have to be happy and optimistic just after a train collision of market and economic factors.

In Austria, the coalition government announced in November that both its members agreed on establishing a constitutional debt limit. The government leaders said the measure would help to regain the trust of the financial markets in the Austrian economy during difficult times.

Now, the government faces claims it has abandoned the ‘debt brake’ proposal, after the most recent summit of European Union (EU) decision-makers. The EU’s state and government leaders met to discuss details of the planned EU-wide federal debt brake accord. They eventually agreed that passing regular laws would be sufficient – a decision which was widely seen as one step back compared to initial ambitions to introduce constitutional debt limits in all 25 participating nations.

It would seem the world is becoming a slightly more optimistic place.

I should be glad I’m starting to feel "bullish". Encouragingly, the market is rallying. Although a correction does seem likely as the Dow arrives back at pre-2011 summer slump levels, it still feels like the start of a very good 2012.

Market psychology appears to have made a strong reversal; terror has flipped to greed and I don’t see why.

As CEO of one of the world’s largest stock market websites I can see broad interest has rocketed in 2012, the same way it was chilled to the bone through the gloomy weeks of pre-Christmas euro crisis. Whatever the cause, something threw the switch and that is very bullish.

The US recovery had been going on in the background over most of 2011. This recovery is only now popping up in the official numbers. The sudden shift in sentiment is still a mystery. The current rally is impressive, especially when you consider the supposed cause of markets’ recent trouble (i.e the euro crisis) is still in the semi-random zone of political shenanigans.

If the market can rally like this then it can run a lot further this year. The crowd appears to be pre-empting dramatic economic improvements. Remember, the stock market looks a year out, so it is seeing 2013 as a year where the economy is good for stocks.
This is, of course, good news for everyone. After so many years of increasingly grim developments it is about time for turning points to be reached.

There are a lot of "perma-bears" disappointed the euro hasn’t imploded, taking a large chunk of the world economy with it. For a moment they were basking in the glory of prophets standing on the mountain top as the clouds part. Sadly for them, and happily for us, it doesn’t look like the apocalypse is going to unfold. Instead, it looks like recovery is on its way.

It still seems amazing to me after such a rough and dangerous economic ride that we could be in for a positive 2012. Yet all the pointers say there is light at the end of the tunnel and it’s not a train coming the other way.

As such, this "bear" is starting to moult his fur and grow horns. Optimism, of course, doesn’t make such compelling copy as premonitions of disaster, but even if we are starting on the road to recovery there will be plenty of potholes on the path and precipices to look over along the way to keep it interesting.

Visit ADVFN for free, real-time stock prices.

Follow Clem on Twitter: @ClemChambers

Clem’s personal website : www.ClemChambers.com

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