The outlook for the FTSE 100 (FTSEINDICES: ^FTSE) looks as cloudy as the British weather right now.
They say the weather is going to brighten up a little, but I’m not too sure about the stock market. I don’t expect a sizzling barbecue summer.
In fact, I suspect the outlook is wet and blustery.
Which is absolutely fine by me.
Storm Warning
I enjoy when the sun shines on the stock market, but I don’t want it to shine all of the time. A good storm can do your portfolio the world of good, because there are bargains to be found once it subsides.
The hurricane of the financial crisis turned out to be the mother of all buying opportunities. Just over five years ago, the index hit a low of 3519.
At time of writing, it stands at 6865. That’s almost double the value.
It’s been an astonishing bull market run. And it was the credit crunch that allowed it to happen.
World Of Worry
I don’t expect anything that disastrous to happen this summer, and I don’t want it to either.
But I think we could be in for a bit of turbulence, given political troubles in the Ukraine, the beleaguered of eurozone, slowing China growth and US monetary tightening.
Yes, the UK is in recovery mode, but plenty of countries aren’t.
To add to the troubled picture, company earnings have disappointed lately, and there is widespread view that the stock market is fully valued, with few bargains to be had.
Fancy A Dip?
Which is why I would be happy if the stock market dipped over the summer, as history suggests it has a habit of doing. If it did, bargain stocks would start popping up all over the place.
Maybe we need to take a step or two backwards, to move forwards.
Three To Watch
Although there are already plenty of buying opportunities today.
Mining giant Rio Tinto is in recovery mode, after sustained falls in the commodity sector. And it looks dirt cheap, trading at 9.6 times earnings.
Standard Chartered has been hit by emerging markets uncertainty, but now could be a great time to dive in before the share price picks up again.
Tesco has been abandoned by shoppers and investors alike, but that could make now a great time to sink your teeth into its juicy 5% yield.
So there are three opportunities right there.
Summer Fun
If we do suffer a stormy summer, as I suspect, there will be plenty more.
Ace fund manager Richard Buxton at Old Mutual reckons the FTSE 100 could hit 7500 this year. I hope it does. But only after I’ve loaded up on cheap stocks over the summer.