The world economy is at a critical turning point. A double dip is looming on the horizon. A repeat of the massive sell-off we experienced in 2008 could be on the way. The European crisis is far from over. Greece has been negotiating a debt swap for weeks. Greece’s creditors could realize losses up to 70%. This move is not expected to solve the problem. The current deal with Greece only covers private creditors and doesn’t touch any debt owed the European Central Bank. Needless to say, Europe will be dragging on the world economy throughout 2012.
China and Asia are also slowing. Recent reports from Bloomberg say China’s GDP rose 8.9% in the fourth quarter. This was a little higher than the 8.7% average estimate but still foreshadows China’s earlier statements of slowing growth in 2012. With two of the major influences of the world economy floundering, how can anyone expect the stock market to rise? The answer is simple, stick to solid American dividend-paying stocks. The Dow dogs made huge gains last year and they will do it again this year.
General Electric (GE) has been making a good run up since forming a bottom last year. The stock has gained more than 25% since moving up from its base around $15. GE is currently trading around $19 and looks strong to continue. In its fourth-quarter statement GE reported earnings of $0.39/share, an 11% gain over the same quarter in the previous year and full-year earnings are up 22%.To continue reading, click here.