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There’s gold in those financial clouds!
Never mind silver, the big cloud that is the current financial crisis could have a gold lining for those who are financially able to take a bit of a punt.
The volatile nature of stocks and shares may make this one of the best times for growth that this century has seen and wisely chosen investments could deliver exceptional returns over the next year.
However as we all know, playing the stock market can bring much pleasure but also much pain. Get your investments right and the returns can be breathtaking, but get them wrong and losses can be equally breathtaking, and not in a good way.
Finding the right investment may not be easy, but for those of us with a little extra cash to spare, in some cases even as little as £500, there is a significant number of promising looking investment opportunities out there that are worth a look at.........
Surprisingly, the UK is now the seventh largest manufacturing producer worldwide with plant and equipment companies seeing output increase by over 16% in the last year. UK based funds that cover this sector provide an opportunity to buy in to this trend and some funds have delivered returns in excess of 25% in the last year.
Currently Europe isn't fashionable with investors, but companies in Europe may offer significant potential due to their low valuations but strong balance sheets. For the average company in Europe, more than 10% of total assets is cash. According to Fool.co.uk, listed European firms are trading at about 10 times earnings for 2011, well below the average of 14.5 per cent for the past 30 years, meaning that there may be strength in weakness.
Despite its economic woes the US stock market posted a 17.3% return last year, well above the 9% posted by the UK's FTSE 100. Many technology, retail and communications companies produced strong returns last year, among them McDonald's, whose share price rose from a year low of $61 to an $81 high, and Oracle, whose shares soared from a low of $21 to $32.
The Emerging markets sector has become synonymous with high returns and with economies in Asia and Indonesia continuing to generate strong GDP growth, the trend for strong positive returns looks set to continue. The key drivers of GDP growth in these emerging markets remain strong; attractive demographics, low labour costs, availability of natural resources, increasing prosperity, improving productivity and sound fiscal management.
Paul Dixon – Chartered Financial Planner at Census Financial Planning