Economic growth in emerging markets in China and India represents good news for investors, an economist with one of the nation?s top investment firms told Baltimoremarket watchers Monday.
Larry Adam, chief investment strategist for Deutsche Bank Alex Brown, said an excess of pessimism exists in the market, driven by worries of recession with the spiraling housing market and decreased consumer spending.
“There have been plenty of shots on the economy,” Adam said. “What that?s done is make the sense out there overly pessimistic.”
Adam pointed to the American Association of Independent Investors? Sentiment Survey, which during the week of Jan. 10 showed 59 percent were bearish on the economy. But Adam said historically whenever the ratio of bears to bulls has exceeded 2 to 1, a Deutsche Bank study found 12 months later the markets were up an average of 16.39 percent.
Adam said the downturn in the nation?s residential housing market was grabbing investors? attention but represented only part of the investment picture. That sector represents only 4 percent of the nation?s gross domestic product, while exports account for about 12 percent and continue to grow, he said.
“The strength of exports is off-setting the weakness of the housing market,” Adam said.
Other market watchers also saw reason for optimism, if investors have enough perspective.
“I think if you look at it over five or six years, you?ll be able to look back and say, ?yeah this was a good time to get involved in the market,? ” said Robert Wasilewski, investment adviser with Baltimore-Washington Financial Advisors. “We?ve been through this time and again, and if it?s pessimistic, it?s because everyone is looking in the rearview mirror, not ahead.”
