GLOBAL - The worst of recent market turbulence is now over, and "real investors should capitalise on the frailty of others" before the market hits back with an upward swing, according to a leading investment manager.
Ned Riley, State Street Global Advisors’ (SSgA) chief investment strategist, global active equity, claims that investors should hurry to participate in the as yet ignored economic recovery, before “the lemmings on Wall Street” begin revising earnings forecasts and stock prospects.
Indicators of a market recovery include the steady decline in US unemployment insurance claims, resilient car sales and upbeat manufacturing surveys, according to Riley.
Another factor that will influence proceedings is earnings forecasts. Riley claims that upward surprises will occur due to the “very sombre outlook” on the part of analysts and company managers. These downbeat expectations will ultimately result in resurgent stock prices as investors are surprised by the strength of the economic recovery.
But despite his optimism, Riley conceded that there were still “a lot of issues that will reinforce the sceptics' arguments in the months ahead”.
More stringent accounting standards, the possible expensing of options, restatement of company earnings, a slowing of economic momentum, bearish commentary on Wall Street, and concerns over terrorism will be some of the reasons used for coming market corrections, he said.
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