Neither Bulls nor Bears are satisfied with stock market action. Just when it looks like the market is going to breakout to higher highs, it doesn’t. During selloffs, when it appears to be on the verge of breaking down, it doesn’t. Almost two years ago, the Bull prophesied that the stock market might be in for an extended period of range-bound trading. That has certainly been the experience so far.
However, within the market many changes have been taking place. Some of the previous growth darlings are stagnant. New groups have come to the fore. Staples and utility companies are now hot. This is in response to fears about a slowing economy. Who knows what new sector will next assume stock market leadership? In fact, sectors may become less important than specific companies. Company specific circumstances and outlooks may become more important.
Conclusions; it’s still a market of stocks (companies), not an index or collection of sectors. Company specific performance and opportunity matter. Trying to predict sector rotations is fraught with inconsistency and error. Owning companies that create shareholder value by growing earnings works; it always has. Price matters.
Taking a longer view and investment horizon is the only way to deal with the trading environment we have today. That is not to say, ignore risk. That must be managed, but over-reacting is a mistake. Adhering to these principals will bring success and satisfaction; stay steady, my friends.
The Lonely Bull