Stocks are Following the Script
Earnings season is in full swing and happily they are following the script! The earnings recession fears we had just a few weeks were largely overblown as positive earnings surprises are beating negative surprises 3-1.
I was confident that the negativity was exaggerated as stocks tend to overreact in either direction. We could see that the fear of a global slowdown was causing a panic, rather than an adjustment in expectations. A lot of investors sold in to the fear. Holding our ground in the face of adversity and many nervous client conversations proved advantageous.
I am cautiously optimistic for the immediate future as well. The U.S. economy is holding up great amid a global slowdown (one that I think might be ending). One indicator that is making me think that the world economies are on the mend – gas prices. Gas goes in the direction of the economy and prices at the pump are rising. The oil companies are saying its because of problems at some refineries, but I believe its increased demand.
From what I see on the street, as well as the 30,000 foot view, is that we should get reasonable growth. Nothing crazy but good enough, accompanied with a strong job market and low inflation, which should translate into higher stock prices.
Although, you may need to be prepared for a correction. Strong earnings have pushed the market higher and a consolidation after earnings season is very likely; nothing major, maybe 3-5%. Yes, it will hurt a little while we’re in it but don’t overreact and panic. It’s not enough to trade so don’t try. The time for cash is not now. Although we stand at the ready to take action no matter what the market throws at us, always with one hand on the sell button should conditions warrant. This is one obvious advantage of the hands on tactical asset management we do for our clients every day.
For more information on how we can help you set up a rock solid retirement master plan that takes advantage of forward looking tax strategies and that delivers returns while managing risk, simply give me a call today.