The beginning of the quarter found the stock market index (s) pushing up to new highs
for the year. The month of May followed with European Debt issues and poor domestic unemployment figures pushing the market into correction mode.. This correction
which we are still in has been the largest correction since the market recovery began in March of 2009. At these levels stocks are certainly not overpriced although since the recovery began about thirteen months ago the market has been trading more off of economic data then corporate earnings. Expect this tug of war between neutral
to less than expected international/domestic economic data and reasonable to positive
corporate earnings to continue to create volatility in the stock market. This quarter showed us that the chances of a V shaped recovery are clearly very slim. In order for a sustained recovery to continue both corporate earnings and economic data need to exceed expectations. This market pull back clearly shows us that the road to recovery is filled with pot holes. If consumer demand continues to get slightly better and corporate earnings exceed then eventually hiring will follow. As mentioned in last quarters report
I expected a correction. Until some of the macro data shows signs of improvement,
I do not believe that down and cheap are good enough reasons to buy stocks. However,
one revision in a data point could change this and when this happens, considering all the cash in money market accounts yielding almost zero, it is very important to be invested..