The Dilemma for Investors with Money to Spend on Stocks

George remains somewhat bearish on the housing market in 2011 and into 2012. If you are a buyer, great; but sellers may continue to face lower prices. However, there are some positive signs.It’s a tough market for equities right now because there’s no expectation for major growth. So far, big companies haven’t said enough on the subject and, with other less-than-enthusiastic news, the stock market is waffling. In fact, the main stock market indices could experience a total breakdown here if the numbers from corporations don’t start improving.

Investors bet big on strong first-quarter results and while, so far, big companies are reporting growth, they’re not reporting numbers that are beating consensus and this means that share prices are very unlikely to advance. In this kind of environment, new stock picking should go on the backburner. It’s a wait-and-see market and, like the economy, first-quarter earnings results aren’t going to be uniform at all.

Texas Instruments Incorporated (NYSE/TXN) just reported first-quarter financial results that missed consensus. This important benchmark company in the semiconductor industry reported growth, but nothing to write home about. Like many stocks in the technology sector, this one looks like it’s rolling over.

And the banking industry hasn’t reported numbers that have been up to snuff. Yes, there is growth, but, from my perspective, the numbers aren’t improving enough to warrant new positions in the sector. This is the situation the broader stock market finds itself in right now. First-quarter numbers are generally better, but not by much.

I come back to the gold mining industry as one of the few sectors with any growth left in them. Now that everyone is newly worried about debt and deficits (because Standard & Poor’s says so), upcoming currency wars are making the case for gold that much better every day.

With the news we have right now, I have to say that investment risk in equities remains high. The broader market already went up solidly in anticipation of strong first-quarter earnings. Companies so far aren’t beating consensus and they aren’t guiding higher. This presents a dilemma for investors with money to spend on stocks. Does the risk justify the potential return? Should you be a buyer of new positions in this kind of market? I say no to both questions, and it isn’t that I don’t expect the economy to improve or that corporations won’t keep growing their earnings. With the news we have right now, the growth isn’t strong enough to justify any bold new moves. We’re at a time now when a lot of previous expectations are coming together. What develops next is anyone’s guess. One thing I know is that I wouldn’t sell any gold or silver. This is the only growth industry left and it might just be the only store of value going if the sovereign debt issue cascades.