Last week, I looked for the kind of events that could turn around our stock market fortunes and we picked up two of them on Friday night/Saturday morning, with the European Central Bank (ECB) opting for something that looked like a European version of QE or quantitative easing. And as well, China’s central bank chopped its 12-month lending rate by 40 basis points to 5.60% and the 12-month deposit rate by 25bps to 2.75%.

As I pointed out on Saturday, the European markets loved the decision, with stocks spiking. The German Dax was up a big 2.62%, the French CAC market up 2.67% and the Spanish IBEX stock index shot up a huge 3.05%!

The big question

But why did this happen and what’s the lesson for stock market investors? This is the big question we all need to understand to ensure we invest wisely in 2015.

There is an overwhelming pall of depression from some market experts I respect, but it does not mean that I can accept they have totally got it right.

Goldman Sachs’ economist, Tim Toohey is very negative, no, too negative, with his 2015 growth set at 2%. This is 0.9% below the consensus guess and I am a consensus man on this one.

It worries me that Bell Potter’s Charlie Aitken might be buying this too hawkish story. Macquarie’s number one equities strategist Tanya Branwhite makes the point that growth – economic growth, that is – will determine what happens to stocks.

Now get this. In my chat this week she said that she is long-term bullish on stocks  – this rally has lots of legs left but they could be smallish steps. Why? According to some, growth looks set to be disappointing.

The Yanks get economic growth for the September quarter on Tuesday and the figure expected is 3.3%, but pray for a bigger number. We need to see growth numbers, forecasts and predictions end up on the positive side and we need them to top expectations, big time.

Play the right game

We are playing a confidence game — our stock prices hinge on it — and that’s why the European markets lapped up the surprise Chinese rate cut and Draghi’s action. And we need to see that the Fed’s ballsy QE plan and the actions around the world actually pay a solid growth dividend.

At this stage you could be pondering what happened to Japan? Next you might ask if pro-growth strategies are any good? However, the Japanese were on a positive growth roll with their QE but then the PM played it too responsibly with a sales tax increase and it helped the economy into six months of contraction — a technical recession!

Former Business Council president, Tony Shepherd told me over the weekend that his Commission of Audit for the Abbott Government showed him how important growth is. At 2%, which Tim Toohey has predicted, it’s bad for the budget deficit and debt repayment but at 4%, he wouldn’t be worried because it would bring down the deficit and debt.

That’s why we need growth. Note Joe and Tony — we need growth and if we get it, then Tanya Branwhite would up her expectations for stock prices in 2015.

HSBC’s Paul Bloxham told me on Thursday that he has us growing over 3% in 2015 and I am rooting for Paul’s economic model over Tim’s. And that’s why I loved the China rates decision, the Draghi play and PM Abe making Japan go to an early election.

So this week I wont only be watching the growth number but I’d love to see US consumer confidence spike on the lower gasoline prices. I want durable goods to show a positive trend and new home sales prove the housing sector is strong.

Hey big spender

Then after Thanksgiving, I want a huge Black Friday for retail, which is the first big shopping day for the Americans pre-Christmas and is the day when retailers start to get into the black after months of being in the red!

These last five weeks of 2014 have to make us believe that growth will be better than expected and if the ducks line up in a row, then the market could have a nice strong finish. This will set us up for an even better 2015.

China, Japan and Europe have helped the snowball of confidence to get rolling again and we have to see our market today react positively to the weekend news stories. If we don’t see it over the next few days (and today is looking pretty good so far!) – and I have positioned myself to be a beneficiary of the expected stock price rises — then I will argue that the doomsday merchants have had too big an impact on the views of the economy – local and global – and this will not only hurt stock prices next year but will also act as a self-fulfilling prophecy problem.

Of course, if I don’t see the growth indicators for the next five years actually deliver, then I will have to wait longer for the better stock and index levels, but I suspect that my positivity will grow in coming weeks and I’m also hoping my super balances will as well.

I remain 100% invested in stocks in my SMSF and see no reason to change that position. And as more funds come into it, I will use dips as buying opportunities.

Underwriting this positive position are the forecasts for growth in 2016, which the likes of the RBA have suggested could exceed 4%! If this looks likely, stocks could spike on the second-half of 2015, as stock markets tend to anticipate the real economy as much as six months ahead.

Of course, if I am wrong, then we grind on up with a lot of lateral movement and that’s when you will really need us to help you pick out the stocks that will be outperformers.

As I say on my TV show: “Switzer, don’t invest without me!”

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.