As I've written over the past month, I expect the markets to selloff and move to downside as corporate guidance (how companies think they will perform over the coming quarters) has been slightly negative. I've also mentioned how the increase in payroll taxes is starting to take a toll on the average persons spending ability. Following a Federal Reserve meeting yesterday, the markets are down today as Fed Governors around the country are uncertain as to how the economy is going to grow this year. Because the government is writing checks we don't have the money to pay for, many believe that government interest rates will start to move up (which we've already seen lately)...hence why investors are being cautious and even negative on the prospects for stock prices. Added to that, it looks as though economic growth in China is not as robust as was previously thought (recently, companies such as General Electric and Caterpillar, both of which are supply a great deal of machinery and services to China have expressed concern regarding future growth in the country based on decreased sales of late).
Now couple that with yet more good signs that the housing market is growing again and we have a slight disconnect on what investors should be doing. Bottom line, I've taken profits and am sitting this guessing game out for the time being. While some stocks are still undervalued and represent good long term investments, I think by waiting right now and holding off on adding to or buying new stocks is a better way to handle the uncertainty we are currently seeing.
This morning, two of my favorite (and most successful) market investors and researchers both came out expressing serious concerns regarding stock prices and both believe we are on the cusp of a serious market selloff (this is something I've written over and over this month). Here are two links that investors (and my clients) need to take a few minutes and check them out. I am on the same page as both of these investors and market watchers and they maintain several of my current concerns and also talk about how they are both positioning their portfolios in leu of a possible selloff in the stock market.
Please click on the links below:
www.cnbc.com (look on the video section on the top part of the screen and listen to Dennis Gartman talk about why he believes we will see a selloff of somewhere around 7%, which is a big selloff (the clip is about 2 and a half minutes long).
http://blogs.wsj.com/marketbeat/2013/02/21/doug-kass-im-as-bearish-as-ive-been-in-some-time/
This is a New York Times interview with Doug Kass, one of the most successful money managers who I've tried to model my investment approach and thesis after since I started my career in the business.
As my father often says, I'm not being a 'chicken little' and saying the "sky is falling", but I do think now is the appropriate time to circle the wagons and concentrate on preservation of capital instead of growth of capital. Sometimes it's best to just stay on the sidelines and wait...no one wants to be last one at a party when the punch bowl (or whatever your drink of choice) is taken away.
