Sometimes you just have to scratch your head and say "huh?". Yesterday a general survey that was done across the country by the government showed that in the 1st quarter of this year, there was the largest increase in household net worth in 7 years. Now couple that with news out today that showed an increase in the number of foreclosed homes last month....ok so what do both of those mean? Well I believe there is a widening gap between the "have's and the have not's". Basically the middle and upper classes are doing better while the lower-middle class is still struggling. This is a theme that we've seen over the past 5 years since the housing bubble burst. This doesn't really have a big impact on any investment decisions I'm making as I continue to see the housing market turn around and our economic recovery continue apace. I make mention of that because I wanted to point out that you can never just take one economic release or one news story and base your investment decisions off of that. When you have crosscurrent news such as these two, you have to put both into perspective and continue to focus on the bigger investment picture.
With respect to the overall markets, stocks are up nicely again today as we continue to see them rally (as I wrote about what I thought would happen) on the heals of the poor performance we saw last month. While U.S. stocks are looking good today, especially the financials, things are still troublesome in Europe as Spain is now the next dominoe to drop following the ongoing financial crisis gripping the continent. I expect the markets will be somewhat skiddish tomorrow as we head into the weekend and await the results of Greece's vote on what the overall government system there will be like (remember they've been functioning with a divided government for sometime now). Depending on which political party wins, there will some serious decisions that still (yes they still haven't done anything to fix the financial crisis they are in) need to be made in order to regain control of the country and the burdensome debt they have.
Over the next quarter I continue to think we will see a broad reallocation out of bonds and into U.S. stocks and as that happens the markets will move higher (not straight up of course). Consequently I'm using opportunities when stocks move down in price to add to existing stock/fund positions as well as getting new money invested.
Btw have I mentioned the U.S. Open golf tournament is on?
