Buy fear, buy now

Stocks globally have been hugely volatile. What now? Forget what stocks did yesterday, last week, last month, last year. None of it matters for where stocks go next. And now is a great time to be bullish.

First, sentiment is uniformly black - that's almost always bullish - long term. Then, too, fundamentals are much stronger than most think and any type of positive is largely ignored by the media - which implies the potential for upside surprise. That gap between too-dour sentiment and much-better-than-appreciated fundamentals is a hugely positive force that should boost global stocks higher into 2012 and beyond.

To start, though a new global recession is widely feared, all basic signs consistent with historic forecasting point to economic reacceleration, not a slowdown. US growth accelerated to 2.5% in the third quarter. Expectations broadly are for continued global growth in 2011 and 2012 - the Internatonal Monetary Fund projects every major developed nation should grow next year, and emerging markets should grow faster. The eurozone overall likely is a slow spot, but the rest of the world should help pull it along. Globally, retails sales have surprised to the upside, industrial production is strong and overall trade is increasing - no global recession.

And leading economic indicators are on average high and rising globally - quite the contrary of what happens before recessions. Ditto for the yield curve (long-term minus short-term interest rates) being steeply upward sloping. And if there's no recession, it's unlikely we get another major bear market in the next 15 months.

Globally, earnings growth continues to be surprisingly strong, but so does revenue growth.

Earnings growth can be the result of cost cutting, but revenue growth is a more direct reflection of global demand. America reports earnings first and fastest - most US firms have reported third-quarter earnings, and growth averages 17.7%, an acceleration over the second quarter and the eighth consecutive quarter of growth. Earnings growth is broad-based - even beleaguered financials earnings grew 12.4%. What's more, revenues grew 11% - faster than in the second quarter. And you see the same thing globally - earnings and revenues are both stronger than expected, painting a much healthier picture of the world than many presume.

A little-noticed phenomenon: in 2012, America either re-elects a Democrat or newly elects a Republican. Either outcome has been historically hugely positive for stocks in election years - rising 14.5% and 18.8% respectively. What's more, this pattern is so powerful, it's mirrored globally.

For more on this market "sweet spot", read: Get set for stockmarket success in 2012.

Recent market action seems classically characteristic of a global correction.

A steep fall based on one major negative story with many morphing versions - fears of a PIIGS debt implosion taking down the eurozone then the world. No doubt, all the PIIGS have problems - but these are five decidedly different economies. Though Italy is in the headlines now, the issue of primacy in the eurozone is still Greece. But it's in no one's best interest to allow a messy Greek default or a sudden break-up of the euro. Politicians didn't let it happen in 2010, they likely won't let it happen now or in 2012 - not since ample money is available to backstop the eurozone's periphery.

Then, too, eurozone banks are overall much better capitalized than most think, and in vastly better shape than in 2008. And Europe's private businesses aren't nearly as impacted by peripheral debt woes as many think - even in the third quarter, major eurozone banks have reported profits (though profits did fall from Q2 in some cases). Buy the fear - it's bullish.

Start with stocks like these...

With 450-plus stores, America's Dick's Sporting Goods (DKS) is a leader in its niche. In a stronger economy, high-end consumer spending for activities like golf and water sports should drive returns at Dick's and surprise analysts. This stock itself could be the real Christmas present. It sells at 90% of annual revenue and 17 times my expectations for January 2012 earnings.

Also from the US, offshore contract driller Atwood Oceanics (ATW) has a major new rig, the Osprey, doing well for Chevron and multiple new contracts expected from Brazil's Petrobras. High energy prices could keep offshore exploration humming. This would make Atwood as much a growth stock as a value play.

Emerging markets have had a bad year, China in particular. Long term, it's still the place for smart investors, so buy Semiconductor Manufacturing International. It has big leverage on the global economy as the world's leading independent foundry for logic chips. It sells for 44% of where it was trading last year.

In good times, semiconductor firms buy from foundries like this one, and in bad times they rely on internal capacity. The stocks move in anticipation. Semiconductor Manufacturing is currently operating at a break-even level, so its P/E looks infinite. But the firm will make money in 2013, and a low-single-digit P/E will propel this low-priced stock.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.