OCEAN CITY – As global growth slows and the dollar begins to regain its strength, U.S. equity markets are poised for recovery, says Merrill Lynch Research Chief U.S. Sector Strategist Brian Belski, who offers five investment themes that may benefit from this shift in market leadership.
At the beginning of 2008, non-U.S. equities and currencies were among the investment themes favored by strategists. Now, however, global growth has slowed. Despite this slowdown — and the financial crisis affecting the U.S. and global economies — encouraging signs point to renewed strength in U.S. investment opportunities. U.S. equities are poised to outperform over the next six to 12 months, says Belski.
He points to three factors driving this shift: a strengthening dollar; relatively stable earnings and GDP growth in the U.S., compared with international markets; and the increased likelihood of higher volatility in global markets, compared with the U.S.
Belski also offers five ideas for re-entering the U.S. equity market, which investors can use as they reposition their portfolios for a recovery:
1. Companies that produce environmental solutions;
2. Companies that cater to bargain-hunters;
3. Companies that grow through innovation;
4. Companies that benefit from reduced commodities pricing; and
5. Companies that expand through merger-and-acquisition activity.
A question to ask yourself is: Are These Investment Ideas Right For You? Some questions to ask your Merrill Lynch financial advisor include:
— Is now a good time to rebalance my portfolio with an eye towards the global slowdown?
— Would the periodic rebalancing in a Merrill Lynch Consults Diversified Portfolio automatically cover such shifts in market leadership?
— How can I best take advantage of the strengthening dollar relative to other currencies?
— Which sectors and companies are poised to grow through innovation?
— How will U.S. multinational companies perform as growth returns to the U.S.
— Should I consider reducing my exposure to the commodities market?
(A Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-8520.)