Stock selection is 'more crucial than ever'

ON NORTH AMERICA

Standard Life Investments' Jeff Morris says despite a surge in the equity market last year, domestic headwinds present persistent challenges.

Following a surge in the US equity market in the latter half of 2010, the markets face a test of durability as persistent domestic challenges remain and some new international uncertainties have emerged. A 30% upward move in US equity markets from late August to mid February has put the market in a position of discounting a buoyant profit recovery. Valuation expansion was responsible for this move as earnings estimates for the 2011 S&P 500 earnings have only increased 1% over that same time period. This appeared to be a classically cyclical move in the markets with industrial, materia...