More Help For The Economy

Commodities continue to sell off this morning.  Gold is down another $25 per ounce.  Other soft commodities are down around 3%.  I think this is all good news. 

  1. First of all, when markets eventually bottom, they have taken down almost every sector.  Commodities and agricultural stocks were really the last hiding place.  Now they are correcting.  So, that’s positive. 
  2. Secondly, lower commodity prices help our economy as consumers won’t pay as much for bread, milk, etc.  It’s only a couple of days, but the moves are big and it does help.
  3. Lastly, commodities selling off means the dollar is strengthening.  As that happens, this attracts foreign investors into our markets lifting stocks.

2002 & 2003 All Over Again?

I would not be surprised to see this market act just like 2002.  We made a bottom in the fall of 2002.  But, the market really struggled moving back and forth until March of 2003.  Many remember March 2003 being the bottom.  But, the official bottom was October 2002.  It would not surprise me to see this market rally from here only to fall again over the next few months and eventually bottom.  We’re in a process it appears, not a v-bottom.  That’s fine.  That gives us all time to re-position and get into the best companies in the world.

For the next 2-5 years, I still like technology, global growth companies, healthcare/biotech companies, aerospace/defense, & financials.  Financials are becoming the best bargain with technology not far behind.  But, if commodities keep selling off, you’re going to get your chance to buy those stocks you’ve been watching run up for months like agribusiness, steel, coal, etc.

So, don’t get too aggressive here but if you’ve been on the sidelines, dip your toe.  But, we certainly don’t have the enthusiasm for stocks we need to say the selling’s over.  I still like the strategy of shorting the overall market with ETFs and buying good quality companies on sale.


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