Could this be the turning point for shares?

August 9, 2012, 2:35 pm Bruce Jackson Yahoo!7

Is there no stopping these markets?

Global stock markets are on the rise, buoyed by better-than-estimated corporate earnings and hopes that global central banks will take steps to boost economic growth.

“The fear of things collapsing is going away,” said Tom Wirth on Bloomberg.

“Global equity markets may be at a turning point after their recent lows in June,” said The Australian Financial Review.

Regular Motley Fool readers will know, no matter what the markets are doing, we don’t change our investing tune...
  • We invest in companies, not in share prices, or charts.
  • We don’t try to time markets, going all-in or all-out based on what’s happening in Europe, the strength of the Australian dollar, what Ben Bernanke may or may not say, and the price of snapper at the Sydney Fish Market.
  • We never let fear drive our investing decisions, although we do like the share prices fearful markets present us.

The last few years have tested the mettle of investors, the All Ordinaries index being down 36% from its peak 5 years ago.

But does that deter us from equities? Not on your Nellie. Bonds may be all the rage now, but shares will have their day in the sun again, some day...

That said, with no-risk bank interest rates available at 5%, we can’t argue with those returns, especially as inflation is running at its lowest level in more than a decade, below 2%.

No-risk inflation-beating returns are incredibly rare these days. In the UK, for example, savers are lucky if they get a 0.5% return on their cash, and inflation is 2.4%.

Team GB may have a few more Olympic gold medals than us, and the Poms may have the Ashes, but we’re giving them an almighty economic hiding.

Back to equities. Today we’re seeing decent value across a number of different companies in a number of different sectors.

Gold has the last laugh

We’re seeing value in selected commodities and resources stocks, recently highlighting gold producer Silver Lake Resources (ASX: SLR) as one for your radar.

As if to punish us for daring to mention gold in a positive light, Silver Lake promptly went out and announced it was acquiring Integra Mining (ASX: IGR) for around $425m, promptly sending its shares down 10% on the day of the announcement.

Great timing... not.

Still, Motley Fool Analyst Mike King thinks the deal makes sense, with the combined company emerging with a number of potentially lucrative mining projects to go with its existing producing gold mines. The ‘new’ Silver Lake will also have no debt and cash of $107 million.

Mike has obviously been reprimanded on his poor timing. That uncontrollable fact aside, we’re bowed, but unperturbed. We’ll know in a few years whether an investment in Silver Lake is a winner, not a few days.

Remember: courtesy of the wonders of compounding returns, investing wealth is generated over decades, not days, weeks and years.

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