Red was definitely the color for investors in October.

Stocks were down across the board. Almost no company was spared. The worst damage was done to high growth company stocks that also sported high valuations. These were recent stock market leaders and had good gains embedded in their valuations. Once the downturn started, investors were quick to try to take these gains before they eroded away. The pace of the downturn was head spinning.

This correction started with a backdrop of an excellent economy and companies that expressed continued optimism for their own prospects. Analytically, it was difficult to make sense of the drawdown. Yes, there were expressed reasons; inflation, higher interest rates, an ongoing trade war with higher tariffs, and, of course, political uncertainty with imminent mid-term elections. None of the concerns were new, it just seemed that suddenly they all became important.

Now, in November, the worst seems to be behind us. Business fundamentals do not seem to have changed much. The election will soon be history. In the meantime, the holidays are almost upon us and business conditions seem to be as good as ever. Yes, interest rates will be going higher; they are still historically very low. Inflation has picked up modestly, but that is mostly good since it has been too low for too long.

We will probably look back at October as just one of those short-term corrections that periodically hits financial markets. We may not even remember these events; do you remember the past half dozen setbacks? Fundamentals still matter, and they are good. During this period, we have taken the opportunity to upgrade a few positions on very favorable terms. The future still looks bright; stay steady, my friends.

The Lonely Bull