For those that take some time to read the financial and stock market commentary that I offer as often as possible, I apologize for my lack of writing of late, but to be honest with you I don't see the point in writing when there is really nothing to write about! By this I mean, there hasn't truly been any market moving/influencing events that have taken place of late. I can't stand individuals on CNBC (which is the stock market channel) that talk about useless subjects that don't really pertain to people making money or making investment decisions. All that being said, here is a list of some things that I've been monitoring of late.
- Tensions between Iran and Israel...this scares the heck out of me because any military action that takes place in the Middle East will have wide ranging consequences, not only for stocks, but for geopolitical situations around the world. As it stands, United Nations sanctions against Iran has done nothing to deter the country from its nuclear weapons program...recently a high level official in Iran was quoted as saying that Iran had the capability to strike the U.S. at any time if necessary (they were referring to our support of any military action taken by Israel, which is one of our major allies).
- The lack of a clear front runner and leader in the Republican primary so far. Now I'm not getting into personal politics by any means, but historically speaking, when there is a Republican in the white house, the stock market has performed better than when a Democrat is President. Thats not me, that's just history (it has to do with the mentality that Republicans are more pro business that Democrats are - once again this is not my opinion but just history). The fact that Romney or Gingrich or Santorum or Paul can't seem to substantially pull ahead of another is troubling in that there is no clear leader. Investors and money managers seem to like Romney because of his past financial background (he used to run a money management company), because they view him to be a pro-growth Republican candidate; as any one who watches the news has seen how he has been losing luster among voters of late.
- I'm tired of saying this but the European financial crisis is still a concern. Simply put, Greece is going to eventually default on their loans and fall into "bankruptcy". Once that happens, the European Union will have to deal with the other countries that are facing the same financial issues that Greece has had. I continue to be of the opinion that Europe will fall back into a slight recession over the course of the year and will start to stabilize around mid 2013.
- Another small concern I'm starting to have is the increase in the price of oil (which is now over $100 a barrel). As I've mentioned before, an increase in the price of gasoline acts as a tax on the American consumer and if it stays elevated for an extened period of time could act as a headwind to our economic recovery.
- Now this may sound strange, but I'm also concerned that the U.S. stock market has performed so well this year...yes I know that I've been saying for quite some time that this was going to be a great year for stocks, which I still believe it will be, but I also believe that the market in general needs to rest a bit before an upward move in stock prices continues. Yes I understand this sounds strange, but drastic changes (up or down) in stock prices should be viewed with caution because volatility (the "rollercoaster") can be profitable as well as wealth destroying. This is similar to when the markets rose quickly in 2007 only to get crushed in 2008...all I'm saying is that we need to see stocks pause and rest a bit before they continue to treck higher.
Wow...I know I've written a lot about what my concerns are today, but I continue to believe that U.S. stocks represent the best place to invest money at this point. I'm warming up to China and Japan, as both countries have had decent economic numbers as of late. I also still favor Latin America because of the natural resources they export and how in demand their resources continue to be.
Ok, so I'm a little tired of typing now but I will be posting tomorrow about some of the individual stock positions and Mutual Funds that I currently own and favor, and some of the recent developments that have occurred (all of which are good!).
Have a good rest of the day...
