Editor’s note: This article was first published in November 2011. Its view of the US market, with the recession receding, Groupon’s recent IPO, and Zynga and Facebook still to go public, is from then; Zynga listed in December 2011 and Facebook in May 2012.
While many questions about the European economy remain unanswered, more and more experts are confident that recession is receding in the United States. Despite high unemployment and huge debt, companies listed on US stock exchanges tend to have very stable business models, along with a well-established presence in markets worldwide. It also helps that, for the first time in a long while, US economic growth has turned somewhat positive.
The potential of the US stock market may lie in technology and consumer companies, especially tech IPOs. Although people sometimes talk about a tech bubble, and it can’t be ruled out, it would still be some time before we see one.
The latest case was the Groupon IPO. Even though the company’s earnings can’t be relied on over the medium to long term, it had a strong debut on the market, which leads us to conclude that when Zynga or Facebook decide to go public, we may see quick returns with minimal risk. In a matter of hours, a tech company like this on the US market can deliver a far higher return than any company listed on a European exchange. They’re eye-catching and tempting, and investors want them, even though they aren’t Warren Buffett’s favourite kind of stock.
Speaking of Warren Buffett, experts also recommend investing in one of the companies this great investor has held in his portfolio for decades, Coca-Cola, as well as a franchising giant like McDonald’s. Of course, these stocks are very stable (not very speculative). They are shares to hold in your portfolio while collecting dividends, so you would need to work out whether holding them from abroad really pays off once you factor in commissions and custody fees.
Other expert favourites in the US market include the oil company Exxon Mobil and the tobacco company Philip Morris, not to mention big tech names such as Google, Apple, eBay and Microsoft.
As we can see, the US market offers a wide variety of companies, although the highest return in the shortest possible time would undoubtedly come after the Zynga and Facebook IPOs, so it never hurts to be prepared for them.
Featured image: Cullen328, CC BY-SA 3.0, via Wikimedia Commons.
