I have no idea what the market will do today, and I am not alone. In fact, clouds obscure tomorrow, the next day, and more than few days after that, as well. The only thing I have a grip on is the future of the market. By future, I mean that the market has no rational reason to collapse and every reason to keep moving forward, even if it is in fits and starts.
Unless some cataclysmic global event occurs, the US is not going back into recession, China is not going to collapse economically, Japan will find its economic legs again, and Europe has a high probability of getting back on economic track sometime later this year. The economies of Latin America, Eastern Europe, India, and the Asian archipelago will do what they are doing – growing GDP, developing a viable consumer base, and establishing trading relationships with the rest of the world.
And with that, let’s turn our attention to making money in this market environment …
In a growing economy, all boats tend to rise, for sure. The trick is to hone in on the areas of the economy that will produce the best return on your money. Generally, in a market, money flows from one sector to another in cyclical rotation. Sometimes, though, it just flows in the direction of the economy or it flows in or out from fear or greed. In any case, find the undervalued, the under-appreciated, and the oversold markets in any sector at any time. Currently, money is flowing out of financials, as the latest market reaction to earnings is to hammer the financials.
Really, though, how bad could the financials be as they suffer through sell offs? As I said yesterday, BofA is in more than decent financial shape now, and with its ongoing program of reshaping itself, its concerted penetration into regional banking markets to compete for loans, its profit-driven wealth management services, and its getting out from under its litigious burdens, it has every possibility to improve its revenue and increase its profit.
As well, as I said the other day, M&A activity is on the rise, and this will have an effect on the other biggies in the financial sector, such as Goldman Sachs. Additionally, the US real estate market and housing industry are on the mend, despite their fits and starts. Interestingly, these seem to mirror those of the larger US economy. As both continue to get healthier, BofA will have some stiff competition from its brethren in the banking world for mortgage, refinance, home improvement, and construction loans.
And, as both real estate and housing construction improve, so should wholesale and retail businesses that cater to the homeowner. Lowes, Home Depot, Costco, Ikea, Bed Bath and Beyond, and Target, to name a few, should all reap revenue and profit from the two renewing industries.
The resurgence in housing construction will also bring revenue and profit to the companies above, as well as to the cement, lumber, electrical, plumbing, and solar industries. Yes, I said solar. Consider that DOW Chemical jumped into this burgeoning area in a big way back in 2011, and it is continuing to move forward.
- Dow Chemical bought NuvoSun for making solar shingles. Dow took an interest in NuvoSun’s technology because Dow had been planning to roll out shingles embedded with solar cells for many years. After some delays, Dow began selling the solar shingles in 2011, first in Colorado and later in California and Texas.
And it is not just the big boys going after this market. Smaller, leaner, and more efficient companies are jumping in as well.
- Solar Shingles are moving across the country, making it easier to power your life. Our base of Authorized Contractors is continuing to grow, and updates on availability will be posted as soon as they’re confirmed. To receive the most up-to-date information and to be notified when POWERHOUSE(TM) Solar Shingles become available in your area sign up here.
I could do this all day, as both the economic and market reality is far different than that which is pitched day in and day out by the breathless media, the wild-eyed wanderers, the perma-bears, and the slick investment/trading cabals that constantly try to influence market movement.
So, ride out the rebalancing going on in the market these days. Clear your mind, tap into the macro frame, get into research mode, and find the undervalued, under-appreciated, and oversold markets in any sector that is now experiencing and will experience money flow in and money flow out as the market finds its way back to the stability that will come when the market accepts the economic reality that just is.
Trade in the day; Invest in your life …
