Behind the drama of Washington politics and dire panic warnings of a US debt default lie multitudes of cash rich, strong companies. These public companies, along with consumers, have gone about their quiet business to reduce debt and strengthen their balance sheets. All have delayed purchases and await the opportunity to buy the car or computer operating system becoming more and more antiquated by the month. Meanwhile, in faraway countries, millions of middle class consumers are eager to increase their standard of living. The stock market is reflecting the state of these companies. Year to date, as of July 22, the S&P is up 8.1% on a total return basis. Second quarter earnings season is upon us and brings the opportunity for upside surprises.
Here at home, stagnation seems to plague the barometers of the economy. Unemployment has stabilized. Monetary policy has run its course and interest rates can’t get much lower. Until the backlog of home foreclosures is purged, housing growth is on a tight leash. Oil remains a hostage of slowing global growth and gold continues to escalate into a higher and higher bubble that may be due to burst.
Although the pace of economic recovery is slow, a good deal of work is being done. A stronger financial foundation is being built. Today, instant gratification is coveted. Slow progress is underrated and patience is not a virtue. Perhaps this new trend toward slow, sustainable growth is just what the doctor ordered. Regardless of stalled policy, businesses keep forging ahead and progress is being made.
At Rodgers & Associates we are committed to keeping our clients well informed and disciplined in their investment approach. By gaining perspective, irrational emotions can be put in check so that long term goals can be achieved.