Rotation; in spite of the recent technology sector correction, much of the rest of the stock market is holding up well. In fact, more stocks are participating in what has been an uptrend. Investors, through their actions, are indicating that they believe the economic recovery will be more robust than many prognosticators have predicted. In fact, the economy is already operating ahead of what many pundits had anticipated last Spring. Progress will wax and wane but proceed.

The shift in leadership to value stocks from growth ones continues. In the past few weeks, this has mostly happened with value correcting less than growth. Once the market reverses, they should advance more quickly too, not every day but over the next few months. Growth issues need not fall apart, it’s just that the momentum is shifting to more business cycle sensitive companies.

Expect more volatility, however. There is a great deal of uncertainty surrounding the upcoming presidential election, our ongoing disputes with China and other trading partners, as well the normal difficulty of predicting the future.

Good businesses adjust and find ways to thrive. This is an important key to how we select investments. Phases of volatility are common and will pass, stay steady, my friends.

El Solo Toro