Go Where the Growth Is

It’s been a tough start to the year and I don’t see how things are going to turn around anytime soon. Just like in politics, it would seem, investors are looking for a change in the fundamental landscape. It’s difficult to imagine the stock market rallying with everyone worried about a recession.

So, if you’re a speculator in this market, you’ve got to be concentrating on where the growth is. Growth stocks, however, are always high-risk. Of course, all stocks are high-risk securities. If you’re a long-term investor, I think you’ve got to be waiting on the sidelines. I do think we’re going to get out of the current slump, but it’s going to take a quarter or two.

Long-time readers of this column know of my affinity for U.S.- listed Chinese stocks. For long-term investors, I think the final leg of the current commodity price cycle is an area to consider. Even with the economy slowing, people still need to eat and farmers stand poised to benefit from strength in agricultural commodities. As I’ve written previously, I really like Deere & Company (NYSE/DE) for the long term.

Getting back to the China story, as you know doubt are aware, investment risk is very high with these kinds of stocks. The stock market in China can’t go up forever. But, I don’t see how you’re going to make any money with any other kind of stocks in the current environment.

Everything in the stock market now is tempered. Individual investors are becoming more interested in other affairs. A great buying opportunity might present itself over the coming months, but it’s too early to make that call just yet.

Unfortunately, it will once again take the Federal Reserve to make investors feel better. This isn’t a good situation for the market to be in.