The good news in this reckoning is that attractive new investment opportunities are beginning to appear out of the blue. I’ve already come across four great stocks worthy of further investigation. Earnings season is always the best time to look for new stocks to consider. The market’s recent turmoil is part of the game.
Still, I wouldn’t be a buyer in this market. Some are already talking about bargain hunting, but I think it’s way too early. Institutional investors can be buyers in this market, but they get paid to buy stocks. It doesn’t make much difference if a large mutual fund buys shares in a company today or next week. For individual investors, the story is different. Timing is everything.
The next two weeks are going to be particularly difficult for the equity market. Global reaction to U.S. mortgage woes isn’t helping at all. It’s fascinating what’s happening in Asia and Europe. Global equity markets are becoming more and more intertwined. We’re at the point now where there really is one global market for stocks.
Stock market psychology is so fragile right now that I think it would be a mistake to take on new positions over the very near term. Central banks around the world are taking action to provide liquidity and easy credit terms to financial institutions. This is a dramatic action. Never before have central banks been so quick to appease the equity markets. They’ve acted quickly in times of war and when currencies are in crisis, but I don’t recall central banks acting this fast to help the equity markets. This micromanagement by central banks is both welcoming and worrisome.
So, we’re left to ride out this storm. My watch list of attractive new stocks is growing. When the dust settles, it will be business as usual. Let’s hope it doesn’t take too long.