As I wrote earlier this week, I've turned positive on the markets over the past week. I know yesterday was an ugly day, down over 3%, but I took that as an opportunity to start picking at some of the stocks that I find attractive...AND if the market continues to sell off, I will continue to buy more stock as I see the risk/reward scenario as very favorable going forward.
To repeat for emphasis, here are some of the reasons I like the market and believe now is the time to get in:
- Fourth-quarter Gross Domestic Product (GDP - which is a measure of how the economy is doing) will approach 3%, which is much higher than economists and the government have forecasts.
- our banking system is stable and growing
- strong corporate balance sheets and earnings releases
- the Federal Reserve is doing there part to sustain and stimulate economic growth
- Washington (and the "super committee") is starting to work together on the budget/debt issues
- there are signs of late that more jobs are being created
- fear and distaste for U.S. stocks is at a high and I expect a reallocation out of foreign stocks and bonds back into U.S. equities
Based on all the above reasons, I'm buying U.S. stocks, as I believe now is a good time to start moving money back into the market....and I'll be concentrating my new purchases in the consumer durables (such as Clorox) and the financials (such as Citigroup/Suntrust/BB&T/Synovus/Etrade) as both sectors are the most undervalued and represent the best places for growth. With respect to individuals that own mutual funds (as a lot of my clients do), I would be moving money out of Fixed Income Bond and Foreign Bond Funds and into a mix of Small/Mid/Large Cap Mutual Funds. Small and Mid Cap Funds will probably make the most money over the next 3-6 months but they will be volatile in price movement, while Large Cap Funds will show more modest gains (and depending on one's age, an older investor should have fewer Small Cap Funds in their portfolio than Large Cap more safer funds).
Buy Buy Buy
