The market has been defying gravity this summer, with the S&P500 up 49% since March. But most of the appreciation has been in what I consider lower quality stocks. Many homebuilders with doubtful prospects have doubled from their recent lows, while stocks that are somewhat recession proof like McDonalds (MCD), Walmart (WMT), Coca-Cola (KO) and Procter & Gamble (PG) have bounced a mere 15-20%.
According to Bloomberg, “companies with the worst earnings led the 45 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago”. It might be a good time to sell some of your winners that have done exceptionally well and either wait for a pull-back, or, if you’re trigger happy, buy solid investment-grade companies. (more)
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