Three reasons to feel confident

With so much negative news in the press, it is easy to feel like you should just give it all up, grab your money and live in the Bahamas for a few years.

However, while we are cautious with the difficulty surrounding the political environment and immense debt issues in many major markets, virtually everyone knows and acknowledges that the world will survive and continue to grow. Amid all the depressing facts headlining business news, we highlight three reasons why as opportunists, value investors and optimists, we feel there are good fundamental signs to be confident about the future.

1.	Valuations – Across major markets, we are not seeing stretched valuations. It is difficult to foresee a complete break-down in markets without high prices. While there can always be short-term declines and volatility, it is unlikely to stay there over the long-term unless you believe the entire world will go into a depression. As such, we are comfortable in holding onto the very best companies at these reasonable prices. Certainly, this is not the best of times. Nevertheless, companies are still making good money and while they continue to sell at reasonable levels, long-term investors can still find good opportunities.
2.	World growth – Like it or not, the world continues to grow at respectable rates of growth. Not brilliant, but definitely reason for optimism. Some of this growth has no doubt been zapped by the recession in Europe and the sluggishness from the United States, but world growth at 2% to 3% per annum still translates into reasonable earnings for companies.
3.	Europe – Given the sovereign debt and fiscal problems, we still believe that the Eurozone will remain intact. There may be slight adjustments and variations down the road, but after 10 years the members of the European Union will push for an outcome to make Europe continuously relevant. If they do not improve their fiscal union and strengthen their monetary system, they will become inconsequential on the world stage. With that, we do not believe that Europe is ready to call it quits and leave it to the United States and China to steer global economic and political policies.

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