S&P Rebounds; Stocks Freak Out

 

Now that U.S. stock markets have had a tremendous, rapid rebound from the August-September market correction, we’re getting tons of volatility in almost every stock that’s reporting earnings this week. It doesn’t matter how successful the company is, or how much they perform above Wall Street’s expectations, the stocks are falling.

What’s really going on here is that the market is using any excuse to take profits after the October run-up. Professionals are selling stocks indiscriminately.

I often emphasize that stock price trends, over the medium- and long-term are all about future earnings. If your stocks have good projected multi-year earnings growth, then ignore the weekly price fluctuations. If your stocks have slow/poor projected multi-year earnings growth (or falling earnings, or losses!), that’s when you need to reassess why you own the stock.

I expect U.S. stock markets to trade sideways between now and the end of 2015. It’s perfectly normal for stock markets to make a big move, then stop climbing, or even fall a bit. Think of it as having a huge lunch, then not being hungry for dinner until 8 PM. The market needs to digest its recent run-up before it can prepare to make a subsequent run-up.

Continue to accumulate undervalued growth stocks.

Happy investing!

 

Crista Huff

President

Goodfellow LLC

Chief Analyst

Smart Investing in Turbulent Times

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