Focus on Stocks. Market will Correct Itself

My apologies for the dry week. I was swamped and even though I was aware of the news coming out of Wall Street, I didn’t get a chance to read deeper or do any significant research to blog about. I am just about caught up now and a few comments I wanted to make about the broader market are not much different this week from these last few months:

 

1) US Growth is Slowing (as evidenced by slowing Job Growth) – Duh! we have all known about outsourcing in manufacturing and technology. With no drilling occuring at home either, auto-makers suffering losses and labor/union issues plaquing airlines, does it really come as a surprise that high growth is outside the US?

 

2) Inflation is Real – Another duh! Did higher cost of living (high home prices), higher gas prices, higher energy prices, higher commodity prices and higher interest rates appear out of nowhere? No! These have been a factor in consumer’s lifestyles now for over 3 years if not more. What is new about this?

 

As far as I can see, nothing changed last week. Stocks moved higher but at these low prices, there is still skepticism as evidenced by the lack of trading volume, which leads me to conclude that people should buy cheap stocks of good companies in good industries and stop worryng about the overall market. Last year, while the markets barely moved up, most good money managers and individual investors returned double digits for their portfolios and there is no reason the same can’t happen.

 

– Faisal Laljee