Though you might not know it from the tone of the media these days, business is booming in the corporate sector. In fact, later this week fourth quarter profits are due to be released and analysts predict that they will have risen 7.2 percent over this time last year. In fact, corporate profits as a percent of GDP are near their all time high (just after World War II) and reaching for 10 percent. With all this growth, you would think that investors “in the know” would be rushing to invest, but one pesky little thing is holding many of them back: the economy. With projections for economic growth in 2012 hovering around 2 to 2.5 percent, investors are wondering if their investments can pan out with such small growth.
Ultimately, it comes down to the sector in which you place your investments, say analysts. For example, the financial sector is struggling thanks in large part to ongoing trouble in the eurozone. Italy and Spain are now experiencing serious trouble borrowing at “reasonable rates” and the big question for many can be summed up in Time reporter Michael Schuman’s latest headline, “Will the euro survive 2012?” If it does not, then even though the decay of the euro could be good for growth in the eurozone, investor sentiment will definitely suffer and, with it, both the European and global economies.
While that scenario sounds pretty bleak, however, there definitely some positive signs within the United States for investors. For example, Brian Begley of New Day Properties points out that the energy sector has a very “different view on the U.S. economic and employment situation.” He tells BEREL that energy resources and associated investments are experiencing “tremendous growth” in today’s market and believes that “the nation’s energy resources can be a catalyst to getting the U.S. back on its feet…as it can become a major exporter of energy over the next several decades.” Of course, he acknowledges, “it’s a global economy…and until we settle the Euro debt issues, and most importantly our own, the path to longer term growth is bumpy.”
What do you think the right investment is in today’s market? Is there one?
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