While the weather in South Carolina has been beautiful over the past month, the stock market has struggled and it's been somewhat cloudy (that's a bad analogy but I figured I'd stay with the weather bit). After we experienced the big rally up that I thought we would). Following the explosion in stock prices higher, the markets have been frustrating and difficult to understand and invest in. That being said, I think the prospects for stocks over the near term could be positive. To reiterate, here are some of the reasons I've written about why I think U.S. equities are the best place to invest a persons money.
- our financial system is stable and recovery
- housing is stabilizing (which has been made evident by recent data releases - even this morning it was released that May pending home sales jumped to a two year high)
- unemployment has come down slightly
- corporate profits have accelerated and despite slow growth, profits and revenues are nonetheless improving (despite the negative earnings I wrote about a couple of days ago, earnings in general have improved over the past year - it's the European calamity that is hurting U.S. Corporations)
- the recently high price of oil and other commodities has come down in price over the past month and while that is a sign of slowing overall world wide economic growth, it acts as a tax cut to the U.S. consumer because it allows us to keep more money in our pockets
- consumer spending has been on the rise
- durable goods orders (which is the number of goods "things" such as tennis shoes or clothes or whatever) has been on the rise
- U.S. banks are well capitalized and business is growing
- interest rates are low
- the U.S. is politically stable unlike other areas of the world (although our politicians have their heads in the sand)
- the U.S. is rich in natural resources
- we have a Federal Reserve who actively monitors our financial system and stands ready to do whatever they can to continue our slow economic growth
I've mentioned some of these before but I wanted to reiterate why I remain, despite some concerns I've written about recently, optimistic and overall positive on the outlook for U.S. stocks.
Remember tomorrow the European summit starts AND if we can get some sort of sign that these countries will work together to address and contain the financial crisis working its way through Europe then we will most definately see the markets explode to the upside. I've been picking up some stocks here and there but I'm holding back a bit to see how things shake out tomorrow and over the weekend. That being said, stocks are very much undervalued as they've performed awfully over the past month (remember buy when stocks are low and sell them when they are high).
Some of the stocks I've been buying are:
Ford
Etrade
Yahoo
KKR Financial
Dell
Chimera Investment Corp
Och-Ziff Financial
Some of the Mutual Funds I've been buying and will be looking to buy are:
RS Mid Cap Growth
FPA Crescent
Permanent Portfolio Fund
Artisan Mid Cap Fund
FMI Common Small Cap Stock Fund
So going forward lets keep our fingers crossed that we see some positive developments come out of the summit concerning the European financial crisis (which I'm tired of having to think and write about)....
