February 4, 2014
By Peter Bower
Psychology plays an important part in stock market trading. Over time, fundamentals mean more, but day to day, investors are swayed by all sorts of inputs. People are people and respond in ways that most social animals do; they are often influenced by each other. Right now, for whatever reason, investors are again fearful and inclined to search for negatives to support that fear. That is why good news is mostly ignored and anything negative is acted upon.
How long this will persist is unknown. However, the fundamentals still appear to be getting better. As of last week, about half the companies in the S&P 500 have reported earnings for the past quarter and year and so far, they are increasing at over a 7% rate. Revenues are growing at around 3.5%. These are good numbers. Sooner or later, this ought to matter. Looking for trouble where it hardly matters, like emerging markets, will pass.
Everything is not perfect, it never is, but the glass is more half full than the contrary.
