In The Lonely Bull

I Read the News Today – Oh Boy

Instead of focusing on the great earnings being reported for the second quarter, investors have focused on a growing list of worries.  Most have nothing to do with the value of most stocks, but provide excuses to sell.  The bad news includes:

  • The Argentinian default
  • Ukraine
  • Russia
  • European Banks
  • ISIS in Syria and Iraq
  • Gaza and the Palestinian/Israeli conflict
  • Inflation
  • Too much growth here leading to interest rate increases sooner

The last two actually do have something to do with security valuations; potentially higher interest rates.  These are usually not welcomed, but necessary.  Rates, too low, lead to market distortions and poor allocations of capital.  And remember, higher interest rates help many investors, savers, banks and many other companies as well.  Good growth and higher rates are usually accompanied by good profits.  That is what is most important to valuations.

We welcome a normalization of rates.  As for other bad news, most will pass into the background.  The world always has conflicts and crises, most have nothing to do with company valuations.  This period will be no different.

The Lonely Bull

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