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Welcome to Profit Confidential • Monday, May 21, 2012

Bad News and Good Opportunity

Monday, September 17th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

I have to say that I’m quite concerned about the overall health of the stock market right now. Investors are jittery and there is real potential for things to go very wrong over the next couple of quarters.

More and more, I’m hearing people talk about a recession precipitated by weakness in the housing market and a lack of confidence in the stock market. It’s too early to make any real judgments about a recession, but the fact that there’s more talk about it is a concern. Sometimes, in the capital markets, the bandwagon effect can make bad news a self-fulfilling prophecy.

So, it’s difficult to get excited about new investment opportunities when the broader market is uneasy. Of course, this is the way it’s always been and there nothing we can do about as investors. We just have to roll with the business environment that exists.

For stock market speculators, the best opportunities continue to be in China stocks where investment risk is very high, but so are the potential returns. Frankly, no other stock market sector offers the same potential as U.S.-listed Chinese stocks. Interest rates are going up in China and this is a very good development because of that country’s fast growing economy. Inflation is a contagion that really does erode your wealth over time.

I’m really looking forward to third-quarter earnings season, when there will be some hard corporate news for investors to digest. You most certainly can say that investor confidence is down because, in the last two quarters, market action was really bad in the absence of corporate earnings results.

I guess there is a lot to worry about. The S&P 500 Index is getting awfully close to where it was at the beginning of the year and the market’s latest drop is occurring with high trading volume, which isn’t a good sign to me. Third-quarter earnings results can’t come fast enough.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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