Foolish roundtable: Interest rates, Olympics and optimism

ASX shares are up 8% in 2012. Optimism is returning to the market. Could this rally have further to go?

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Optimism is back.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has rocketed to a nine-month high.

Peter McGuire from FX Global Capital said…

"It's an election year. We've got the Olympics. It's a feel good year"

Former Federal Reserve Chairman Alan Greenspan said on Bloomberg

"Stocks are very cheap."

He also said rising stock prices create a "wealth effect" that boosts consumer spending and the overall economy. "So equities play a hugely important role, which I think is grossly underestimated."

Next we'll have uber-pessimist Nouriel Roubini telling us to buy the euro, sell gold and pile into shares. Then again…maybe not.

Where were all these optimists last year, when it felt like The Motley Fool was waging a lone war on pessimism?

Motley Fool Analyst Scott Phillips had the answer…

"Last year wasn't an election year. Or an Olympic year."

Thanks Scott.

Motley Fool Share Advisor Investment Analyst Dean Morel helpfully added…

"2012 is also a leap year, so companies will be 1/365th more profitable!"

Great insights as ever from Dean. Perhaps that gives an insight into how our top stock picker finds hidden gems like Maverick Drilling & Exploration (ASX: MAD), up 550% this year alone.

Motley Fool General Manager Bruce Jackson just said…

"BUY — THE TREND IS YOUR FRIEND," although there's a strong chance his comment was tongue in cheek. Bruce doesn't care too much for charts and trends.

Greenspan is right that a rising sharemarket breeds optimism in the economy. What's not to like about a higher superannuation balance?

Somewhat beneath the radar, the ASX is already up 8% in 2012. Perhaps Richard Coppleson of Goldman Sachs was right when he said at the start of the year the ASX could finish up 30 per cent in 2012?

These large-cap ASX stocks have had a stellar first 4 months of 2012…

Company 2012 YTD Share Price Gain
Australia & New Zealand Banking Group Limited (ASX:ANZ) 16.5%
Westfield Group (ASX:WDC) 18.3%
Fortescue Metals Group Ltd. (ASX:FMG) 32.1%
Oil Search Limited (ASX:OSH) 17.6%
Macquarie Group Limited (ASX:MQG) 22.8%
Insurance Australia Group Ltd. (ASX:IAG) 18.8%

and that's without mentioning 'back from the dead' winners OneSteel (ASX: OST) and Goodman Fielder (ASX: GFF), up 86% and 50% respectively so far in 2012, and other high fliers like Senex Energy (ASX: SXY) and Buru Energy (ASX: BRU).

Bring on the Olympics. And the U.S. election. Feel good, Fools. But, as ever, invest in a measured way.

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The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).


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