Anticipation often turns out to be better than the eventual reality. Investors are going gaga over the prospect of lower corporate taxes, fiscal stimulus, and faster economic growth rates. That hope is being expressed in the buying of stocks; especially those married to the business cycle. There has also been some market support from the real economy in higher inflation rates, and other measures showing improved activity.

The question is, “what will investors do once they see the actual legislation on these matters and will it measure up?”

In the meantime the stock market still has weak underpinnings. Markets can go a long way with narrow leadership and poor liquidity, but sooner or later, there is a correction as cold reality is confronted. We are not afraid of corrections. Markets have them all the time, but we prefer to take advantage of cheaper prices when able. The portfolios we build are very robust and have always come back from downturns and gone on to new highs. We are not predicting an imminent correction, but we are also prepared.

Stay steady my friends.

the Lonely Bull