ANALYSIS
Illustration: Peter James Field. Photo: Plain Picture
have to be doubts about howmuch and how
fast the zone as a whole will recover; but
what is obvious is that there are major
exporting companies, particularly but not
solely in Germany, that will prosper as long
as world trade continues to grow – which
no one doubts.
At the other end of the spectrum lies
America. Share prices are already high here,
but there are some sectors of the US
economy you simply would not bet against.
Good news from the likes of Facebook and
Microsoft has o set disappointment from
retailers likeWalmart andAmazon, or energy
stocks like ExxonMobil.
More broadly, however, we also need to
remember that the pro t margins of leading
US businesses are higher today than they have
been for decades and, as a result, they are
sitting on mountains of cash – as, indeed, they
are to a lesser extent in the UK.This gives
them huge scope for returning capital to
investors; either through dividends or, more
commonly in the US, through share buybacks.
So the economy may growmore slowly than
hoped, and company pro ts look a bit at, but
buybacks can still power a signi cant
improvement in corporate earnings.And
when it comes to dividends, then it cannot be
long in either Britain orAmerica before the
much-maligned nancial sector becomes a
major source of income – alongside the
utilities and the mobile phone companies.
We humans are very bad at learning from
history, but the investment message down the
years is that things rarely move in straight
lines, and markets that correct on the way up
are more likely to prove stable and pro table
in the long term.
The other message is that the greater the
uncertainty, the greater the rewards for the
expert stock-picker – this is a year when
quality will count. It is not a year in which a
rising tide will lift all boats!
Anthony Hilton
is the financial editor of the Evening
Standard and former editor of Accountancy Age. He
has worked for The Observer, the Daily Mail and the
Sunday Express, and was business correspondent
for the Sunday Times in New York for three years.
Given that no one
has done this before,
we should not be
surprised if the ride
gets a bit bumpy from
time to time
THE INVESTOR
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