Buckle up, fellow investors, for we could be in for a rough ride over the next few months.
That's the advice given by UBS global chairman Axel Weber who The Australian Financial Review quoted as saying: "I would recommend to investors to really buckle up and fasten safety belts."
Indeed, volatility has returned to the market in a big way. Local unemployment is rising; Chinese growth is slowing; the Aussie dollar has taken a dive, while US interest rates are tipped to rise. Meanwhile, we're stuck in the second deepest oil rout on record, iron ore has extended its losses and copper and coal are also plumbing multi-year lows.
The anxiety doesn't stop there, either. A new report by Fitch Ratings suggests that profit growth is likely to slow down this year for Australia's big four banks, which have, for many years, been the true driving force behind the S&P/ASX 200's (Index: ^AXJO) (ASX: XJO) rally. While they've been great for investors, it may be time to cut the big four banks loose.
But where would that leave the Australian share market? After all, the big four banks account for nearly 31% of the overall ASX 200, so if they go backwards then won't the market as a whole?
Not necessarily…
While the outlook certainly remains unclear, there is still every chance the ASX 200 could end the year significantly higher than its current level. In fact, Credit Suisse recently said it was expecting the index to reach 6,000 points by December this year, which would indicate an 11% upside from today's level.
Amongst all of this economic uncertainty, there is increasing speculation that the Reserve Bank of Australia (RBA) could be forced to cut interest rates as low as 2%. Should that scenario play out, investors could flock towards the share market – and high yielding dividend stocks, in particular.
While I would expect companies such as Coca-Cola Amatil Ltd (ASX: CCL), Insurance Australia Group Ltd (ASX: IAG) and Woolworths Limited (ASX: WOW) to benefit from that, there's one dividend stock in particular I have my eye on.
More on that in a moment…
In the meantime, it's also possible that Telstra Corporation Ltd (ASX: TLS) will climb even further. The well-respected Charlie Aitken from Bell Potter Securities has upped his price target on the stock to $7.00, prompting the stock to rise to a fresh 13-year high today.
Although it's impossible to tell how an individual stock will perform in any given time frame, it's still very clear that the stock market is the best place for your money in 2015, and in the years to come.
