In this regard, we're not naive or ignorant of mixed macroeconomic conditions and current events:
- unsettling ecological disaster thanks to a horrific accident (lack of safety controls or oversight? mistakes? freak event drilling so deep? modern dependence on "black gold"?);
- social unrest (Greece/Europe/Thailand/elsewhere?) underpinned by class warfare and/or necessary reductions in government expenditures (could be good thing over time if private enterprise can pick up slack);
- high debt levels and seemingly irreversible deficit spending by most developed countries;
- likely unsustainable entitlement programs (aging demographics might make earlier promises untenable though politically difficult to change);
- higher taxes in many countries that may squeeze both consumption and investment, the latter of which is critical for economic growth and new job creation;
- more jobs lost through corporate streamlining, mergers/acquisitions, or creative destruction (e.g. old media struggles);
- and, even volcanic eruptions and earthquakes.
- [fill in the blank on our non-exclusive list - you can probably think of other things].
Volatility is a fact of the markets and psychology is a significant influence on market direction. Our hope is that positive fundamentals in many areas check the current trading bias toward negative psychology, stabilize market sentiment and provide confidence to businesses and consumers alike that the sky is not falling, as some might lead us to believe. Many things in the world are on track.
We don't know what the Market will do near-term, but continue to hang our hat on fundamentals of specific companies trading at sensible (or even inexpensive) valuations, including eBay (EBAY), PetMed Express (PETS), Seaspan (SSW), and Weight Watchers (WTW). All the while, we never forget Ben Graham's guiding parable that Mr. Market is invariably schizophrenic and subject to wild swings.
Disclosure: long YHOO, SOFO, EBAY, PETS, SSW, WTW.
© 2010 Jeffrey Walkenhorst
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