One Fool believes the markets are pointing the right way...
It hasn't been easy being bullish about shares lately. The bears can taste blood, and I've got the claw marks to prove it.
Sometimes, even my own confidence has wavered. When the FTSE 100 (UKX) dipped to 5,200 in June, amid a sea of economic troubles, I had to lash myself to the mast to maintain the courage to keep buying shares, and ignore the siren voices claiming the index was sinking towards 4,000.
With the benchmark index up 14% since then, I'm glad I found the rope. Some blue-chip stocks have done particularly well, notably insurers Aviva (LSE: AV), up 40% since June, Prudential (LSE: PRU), up 27%, and Legal and General Group (LSE: LGEN), up 25%.
Our darkest hour
The storm clouds have briefly parted, and I have discovered I'm not alone. I can see one or two others braving the winds and waves.
Former Prime Minister Sir John Major is one of them, recently suggesting that we have passed the darkest hour. People sneered, but they sneered two decades ago when his former Chancellor Norman Lamont claimed to have spotted "the green shoots of recovery", and was belatedly proved right.
A number of analysts can also see daylight. Some point to slightly-better-than expected employment data. Others note that retail sales, industrial output and exports have been less worse than feared.
Many more look at the $40 billion a month Federal Reserve QE3 and other stimulus packages, and believe all this virtual money has to seep into the real economy at some point.
Ready, steady, Iggo!
I've just received a particularly bullish note from Chris Iggo, fixed-income specialist at Axa, telling us to get ready for the boom in 2013.
He says: "I am coming round to the view that conditions are in place for a significant upturn in global activity and a corresponding move of equity markets to new highs in 2013."
Iggo isn't forecasting a solution to Europe's debt problems, a new era of credit growth or rising house prices. He is bullish "simply because the high octane reflationary policies followed by central banks have the potential to create a surge in nominal GDP growth."
Given negative real interest rates, the opportunity cost to corporates of leaving a huge part of their balance sheets in cash is growing, he says. "The headwinds are considerable and we know all about them -- fiscal tightening, de-leveraging, regulatory changes -- but they won't be there forever. Once there is a bit more consumer and business confidence, things will start moving."
I can't vouch for Mr Iggo's forecasting skills, but it's nice to hear anyway.
Taking stock
Perhaps the brightest patch of news is the stock market itself. It is, after all, a leading indicator. It is supposed to point the way the economy is going, anything between nine to 18 months in advance.
And right now, markets are pointing the right way. To FTSE 6,000 -- and beyond!
Anybody who held off from buying shares back in June, expecting the global economy to hit the rocks, will be cursing those damned sirens.
The bearish bit
Any recovery certainly won't be plain sailing. The eurozone, that US fiscal cliff and Chinese hard landing remain a constant worry. Plus there is growing chatter about an Israeli attack on Iran, which would blitz markets (and no doubt present the mother of all buying opportunities).
As the last few months have shown, future market performance is absolutely impossible to predict. There are just too many variables.
But if you're still hanging on for that market meltdown, you have to admit that your strategy hasn't worked so far. If you're waiting for the perfect time to buy, you'll wait forever.
Bulls and booms
There's a rocky road ahead, make no mistake. At the end, there is a notably large wall of worry. There are also plenty of juicy targets along the way, such as FTSE 100 dividend-raising star British American Tobacco (LSE: BATS), dynamite mining company Kazakhmys (LSE: KAZ), high-class engineer Rolls-Royce (LSE: RR) and two of the FTSE's biggest banks, HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN).
Maybe the analysts are running ahead of themselves, and there won't be a boom in 2013. Never mind. It will eventually arrive. You might have to wait until 2014. Or maybe 2015. Whenever it comes, I'll see you there.
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> Harvey owns Aviva and Prudential. He doesn't own any other stocks mentioned in this article.
