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Buy Fear – But are we Fearful Enough?

August 1, 2012 – 5:08 pm

We are being flooded with economic news this week. This information is forthcoming constantly and it is constantly changing. It is always difficult to decide which statistical data bit is most important or the one that signals a change in our economy.

The data is so massive, and in recent weeks and months conflicting, that rational pundits are holding to muted opinions and double talk about the future. It is always a changing picture.

It is a good idea from time to time to step back from the day to day data releases and look at a macro picture of the world. Today almost every government is desperate for growth and taking steps to ease their fiscal restraint, all except maybe Europe which has little room to maneuver. The important part of the world, the place where every other country looks for growth, is Asia, and they have moved sharply away from constricting their economies to fight inflation to expansionary policies to reignite faster growth.

There is already pervasive fear that these efforts are not going to work, that Europe is going to continue to fall deeper in to recession, that the U.S. will slowly succumb to the same fate and that stock prices are going to collapse. When everyone is on board with those dire predictions that is the time to be a contrarian. The stock market has a way of fooling the most people, most of the time.

Look for a place to get into stocks, not out but be patient, for the summer will likely give you a lower point of entry. The issue is will you be able to buy the weakness?

Good Trading
Steve Peasley

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