We Need a Brick-and-Mortar Recovery

It’s going to be difficult to catch a break in this market, as weak economic data are overwhelming everything. I really think that we’re in for a barrage of bad economic news from now until the end of the year and that there’s more downside ahead for the equity market.

You can be a buyer of stocks in this market, but reasonable expected returns have been thrown out the window. Every individual investor I know is just plain sitting on the sidelines, not wanting to participate in what is still a bear market for stocks.

I think there are good arguments to be made that long-term investors could be considering positions in blue-chip names like General Electric Company (NYSE/GE) and Pfizer, Inc. (NYSE/PFE), which now offer very attractive yields. Yet, the investing marketplace has already voted and even institutional investors aren’t willing to bolster their long-term positions.

We’re still in recovery mode from the credit availability crisis and this strain is now pervading Main Street economies throughout the world.

Raw material costs have certainly eased in recent weeks and this is a help to business and consumers. The commodity correction has been just as swift and severe as the stock market correction.

But lower commodity prices alone do not have enough of a stimulating effect to get things moving again. No, we’re going to have to wait for the housing market to get back on its feet, and this is going to take a lot of time.

We all know that the real estate cycle is a long one and, because the current recession is so pervasive in all parts of the economy, it’s going to take a brick-and-mortar recovery to get us out of the current state of affairs.