Some days, the bad news seems to be overwhelming. In recent weeks, we’ve seen a barrage of negative headlines, from a devastating oil spill in the Gulf of Mexico to Europe’s credit crunch.

It’s depressing stuff. No doubt, it puts you and your clients in a gloomy mood. And, unfortunately, a glum investor is not feeling particularly opportunistic or bullish when it comes to his or her portfolio.

Stock markets are struggling to find direction, rising and falling quickly on short-term news and economic indicators. Many skeptical investors want to stay on the sidelines or, worse, push the panic button and sell in a down market.

I revel in my role as a contrarian value investor — bearish sentiment means opportunity. I am pleased to report that I am in a buying mood these days. Despite what you may read or see on the nightly news, there is much to celebrate.

In the U.S., there’s much focus on the weak job market, mounting debt and stale housing sector. But consider this: U.S. manufacturing is up, and interest rates and inflation remain low. Recent employment data show hourly earnings and hours worked are rising. When markets faltered in 2008, U.S. companies moved quickly to address the problem; today, profits are up across the board as the economy continues to improve.

After staging a dramatic recovery in 2009, U.S. stock markets have had a challenging time this year. They will remain volatile. But, given recent weakness, I can’t help but see more upside for Wall Street.

Europe is on the mend, too. The European Union and the International Monetary Fund have approved a US$940-billion rescue package that will provide some relief to jittery markets. Germany has unveiled budget cuts to get its house in order and Britain’s new coalition government is promising measures to tackle its fast-rising public debt. Emerging economies such as Poland and Turkey are well positioned for growth.

Brazil, Peru, Colombia and Chile are enjoying a period of steady growth, thanks to strong commodities markets and consumer spending at home.

China’s economy is at a unique turning point that suggests sustained growth based on the wealth of its own people rather than government investment and exports. Productivity is climbing, workers are receiving higher wages and consumer spending is on the rise.

Companies taking advantage of global opportunities in these new markets are being rewarded. Sales of Apple Inc.’s iPhone are soaring, thanks largely to a shift to overseas sales. Britain-based supermarket giant Tesco PLC is one of the world’s fastest-growing retailers, largely because of increasing consumer demand in emerging markets.

This means great opportunities for investors, too. Firms with global revenue streams have diversified their risks. When one economy weakens, another strengthens — making for a much smoother sales cycle and, at the end of the day, more upside for shareholders.

Of course, your clients’ investment strategies are dependent on their individual situations and a wide range of factors. Younger investors accumulating wealth have many years to ride out markets’ volatility. Investors closer to retirement need to be more defensive when it comes to their asset mix.

A balanced mutual fund is the best course of action for the skeptical investor. If equities move higher, he or she captures the upside. But if stocks fall, the fund’s fixed-income component protects on the downside.

I urge you to do what you can to get your clients out of their funk and to be opportunistic at this point in the market cycle. Pessimism leads to inaction, and an investment portfolio in limbo is a recipe for disaster. Engage your clients, share some positive news, focus on what’s working and move forward together with confidence.
IE

Don Reed is president and CEO of Toronto-based Franklin Templeton Investments Corp.