Until a tiny 14-year-old girl from Romania scored a perfect ten on the uneven bars at the Olympics in 1976, theoretically, there was always room for gymnasts to do a little bit better.
Since our 2.5% economy is hardly performing like Nadia Comaneci, it's not a stretch to say that things could be better. But according to Doug Cote, chief market strategist for ING U.S. Investment Management, the economy is already better than you think.
"And it's not only the U.S. It's happening globally," Cote says in the attached video, where he cites recent economic statistics out of Europe, Japan and China."It looks like we have a global resurgence going on that's focused on the developed economies and the U.S. is the biggest beneficiary."
While the Federal Reserve just passed on tapering and lowered its GDP growth target for next year, their new 3% projection for 2014 is still an improvement from this year and would mark a growth rate that is closer in-line with long-term averages.
At the same time, the latest data also conflicts the dovishness of the Fed, as the Philadelphia Fed report touched a 10-year high, and existing home sales at their best level in over six years.
To play this good-but-not-great growth story, Cote says equities are the place to be. Specifically, he says investors need to be globally diversified beyond the U.S. and the S&P 500 (^GSPC), and would be wise to mimic his bias towards faster growing, small and mid-cap companies.
"Their earnings growth is higher," he says, pointing out that they'll also benefit from their "exposure to a resurgence in economic growth," as well as the fact that, historically, they tend to do better in bull or bear markets.
For some, the fact that the market has pushed past record highs again is reason enough to stay out of stocks for a while, not to mention the fact that an ugly budget fight is also brewing in Washington again that could pose problems in the near term. But that doesn't intimidate this Wall Street veteran.
"I'm not so worried about the debt and deficit," he says, claiming Congress will ultimately stop playing games and figure out a solution. "So I think we have the all clear," he says, noting that even Syrian risks have been taken off the table, at least for the time being.
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More from Breakout:
- Budget, Tax & Economy
- Nadia Comaneci