The markets are getting pummeled on the heels of government dislocation and concerns over the country's financial stability. I know I know, I've harped on this time and time again, but it's the same story different day. As I've also said, there is more pain to come, and I believe Europe will fall into a recession, but with the markets being down so much today, I'm starting to like them. Remember my old saying, "buy when others are fearful and sell when others are greedy"...there are a lot of concerned individuals out there right now and therefore investors are finding stocks unattractive. I in no way believe someone should go "all in" on the markets right now, but the prudent and wise investor is the one who is buying stocks when they go on sale.
Are things around the world troublesome? Absolutely. We have the financial issues in Europe, we have the Iran nuclear weapon issue and Israel's desire to aggressively address the issue, and we of course have our slow growth economy and high unemployment. Ahhh but wait, as one of the most successful money managers I know says, "the U.S. stock market has become the best house in a bad neighborhood". And the thing about it is, if someone is saving for retirement and trying to grow their money in the markets or if they are living off their retirement savings, then the best place to be right now is in U.S. stocks.
I believe that what has unfolded over the past year here and in Europe points to the likelihood that the U.S. stock market will be favored among most other investment markets in the world. Here are some of the reasons why I like the U.S. stock market and why I'm looking to buy the weakness we are seeing:
- Despite the slow recovery in the U.S. economy, it is growing at a faster pace than most other countries (some emerging market economies are growing faster than our own).
- Our financial system, which is the foundation of business growth and economic prosperity, is in much better shape than the rest of the world. While the credit crisis of 2006-2009 was a tough one for our banking system, it is nonetheless behind us; contrast that to the current financial problems occuring in Europe.
- Our biggest companies are in better shape than the rest of the world. While U.S. corporations are not growing as quickly as they have in previous economic recovery's, they are rock solid operationally and financially. Even throughout the 2008-2009 recession, most have aggressively cut costs while also expanding their global businesses.
- The Federal Reserve has agreed to keep interest rates low, which in the fullness of town will help individuals lower their overall household debt, and spur the housing and refinance markets.
- In watching all of the political unrest that has taken place in Europe (Greece/Italy) and in the Middle East (Iran/Lebanon/Egypt), as well as the instability that we are currently seeing, it is evident that the U.S. is more secure both politically and socially.
- Our governmental oversight and investment standards, while not near perfect are among the strongest and dependable in the world; especially compared to those of China and Venezuela.
In summary, in looking at all that has happened over the past year (and is currently happening), the U.S. markets are the best house in a bad neighborhood, and I expect investors will soon come to this conclusion and will start to move money into U.S. stocks. I just want to be ahead of the crowd when that happens.
