February 17, 2022
By Scott Wohlers
Since January 24th, our stock market is seeing inflows of cash into the markets. This is one factor why the Bull predicted in last week’s blog that the correction was most likely over. Other indicators, including sentiment and extremes in momentum, also pointed to the same conclusion. Of course, major events can derail any trend, but so far, it does look like we are irregularly recovering.
The epicenter of the sell-off was the many high-valued growth stocks. The excuse was that with interest rates rising, multiples of earnings needed to come down. Certainly, growth stocks have worked during periods of much higher rates. Exceptional growth will always be valuable. Investors may be coming around to that realization once again. Value stocks, many of them tuned to the business cycle, have been cheap. If our economy continues to recover, then earnings for these companies will expand. So, these can rise too.
The Bull and his partners expect that both growth and value stocks can do well this year. The circumstances of each company are what will be most important. Grow revenues and earnings, and the value of your company can increase. That is the way it has always been. Stay steady, my friends.
The Lonely Bull
