In The Lonely Bull

It has become obvious that the stock market is having a rolling correction. This is one that does not affect every sector immediately but moves through each of them over time. Some are recovering as others come under pressure. The correction may culminate with everything going down, but that would indicate bottoming, not more to come. Indices so far have been little affected but certain sectors and stocks certainly have been knocked down significantly. Crypto currencies are the latest to be hit. In the meantime, some technology stocks appear to be bottoming.

The initial catalyst for the selloff was fear of inflation and the inevitable higher interest rates that come with it. High valuations on fast growing companies initially were the most vulnerable. Then the fear extended to the thesis that the economy was normalizing, and cyclical stocks were sold too. Next fear begets fear, and everything is sold. This is where we are now.

The Bull and his partners do not believe that this setback will be all that serious. There is simply too much money around. If positions are liquidated, then what? There are few alternatives. Money will return. There are many solid companies paying dividends in excess of 4%. The S&P 500 forward price earnings ratio is now under 20: not expensive. We believe the best strategy here is to simply stay the course; stay steady my friends.

The Lonely Bull

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