Bull Market Run up- Go for International Diversification

An average bull run usually lasts for about 3.5 yrs, which has been the trend in the global financial markets for the last five decades, only breaching this time when it crossed the 4th year mark, according to Investech Research. The breaking of this trend might give unusual opportunities to investors hitherto unknown, since last year was marred by subprime crisis pulling down markets globally. Investors, now more savvy and risk averse are looking for further diversifications to mitigate investment risks while targeting more returns out of their investments. According to some experts, the US stocks could rise 20-25% on the sixth year, as already battered stocks could reveal lower valuation levels due to their prolong exposure to subprime effect.

It was revealed that performances of dividend paying stocks fared better from their counterparts, the non-dividend paying ones for the last 10 years. And these dividend paying stocks are from companies which have a strong growth prospect, are already market leaders, and do counteract worst downturns in the stock markets. Investors in the US have already started diversifying their investment options into these emerging markets stocks and elsewhere the opportunities leveraged for. Year 2007 was been indeed a tough year for homebuilders, mortgage lenders and bankers in the US. And with falling US dollars and rising oil prices, it has made the situation worst. If one is to apportion her allocation out of a bundle of investment theories, she needs to look down the lane what happened last year, and what would be it like this year. Gold has been one such example, and with chance of dollar falling further, bullion markets may ride high, with gold price expected to touch US$1000/ounce (28.9 gms) in 2008.

International diversification of stocks is a better option in purview that the global infrastructure boom have already molded in shape, and is likely to be around a US$100 trillion industry, with modernizing world's waterpower resources and transportation to cost around US$40 trillion alone. Thus, there might be some profits from this infrastructure boom too. China, India and Africa are in the hotbed of infrastructure development, with other countries following the track. Global steel prices rose on this backdrop, and are likely to peak up in 2008 due to demand supply constraint. And, not to forget the natural resources industry that has already shown promising returns and a good prospect. The other one to look for is the non-cyclical industry that has consistently performed well in 2007 and is likely to do well this year, particularly in China and India.

Right Horizons Desk