After the initial rebound from the financial crisis people almost immediately started talking about the "rest" of the collapse to come. So far they have been very wrong as central banks have acted together to counteract the liquidity crunch that occurred. They have been so successful that there has been enough cash floating around to meet any stock market weakness with buying.
For well over a year now, really about two, many of the same people who missed the crash - granted about 95% of people - and then called for a post-crash crash, have been calling for a severe correction. They have continued to be wrong.
Last year on MarketWatch I talked about what would trigger a correction. The main thing would be the reduction in Fed QE (quantitative easing), i.e. excess money printing. Since last December, the Fed has been "tapering" their money printing. They are loosely scheduled to end the latest quantitative easing in October. The result has been a slight uptick in volatility. That begs the question: are we due for more volatility and a correction?
For the first time in a long time, bad news is starting to overcome good news in market direction. July was the worst month in over two years for the stock market. The Dow Jones and Russell 2000 both sit slightly negative year to date, and Standard & Poor's 500 benchmark is just a few points positive as large companies have outperformed.
The S&P's out performance is indicative of late cycle behavior. In particular, the recent run in utilities and resource stocks is typically late cycle stuff. I don't own any utilities at this point and recommend selling most. As I indicated a few weeks ago, being even more cautious than usual is warranted given what is going on globally.
In a world with hyperactive traders, my position trading style where I only pick a dozen or two companies per year frustrates those looking for excitement. Those who think they are a great trader are usually wrong. When they take a big loss, they get jumpy and then blame somebody or something else. I've seen it hundreds of times. It is when those who think trading is their calling (only about 10% of people are right about that) get waxed, that guys like me can come in and cherry pick some great investments and then go back to other things.
Today the stock market got beat up pretty bad. There are plenty of people who will feel this is temporary. It might be. We won't know for a day or two or three. What I do know is that some of the companies I think have the brightest intermediate term futures are becoming very cheap.
In the natural resources space, especially energy, there is a lot of volatility. Usually, it is only a matter of a few quarters and at most a few years, that we get great buying opportunities. The last great buying opportunity was in 2011 and early 2012. We might see another soon. It's too early to tell. I am updating my shopping list however. For the most part, anything that has been a "Must Own" stock is a consideration on a pullback.
Over the next few weeks I will be updating the site a bit making it a little easier on the eyes.
One thing I am going to do in particular is add company reports on our "must own" companies that are updated monthly with news and links to interesting analysis.
Also, I will be starting to write an article or two a month for Seeking Alpha, so keep an eye out for those.
The subscription fee for new subscribers, which I'll get to sometime in August will be $199/yer. This is frankly, a bargain when looking at my performance. So far, we have only one narrow loser (Potash thanks to the Russians) and one that is roughly a tie (Barrick Gold, but I am all but certain it will be a winner over time in addition to being a great hedge), all the other picks have won, by a lot.