The sea of red on my screen mirrored the broader market on Monday and, for a lot of these stocks, their sell-offs were worse than the main market averages. This is not surprising considering that most of these stocks are small-cap in nature.
What was telling, however, was that, while just about every stock that I track was going down in price, one of my favorites was actually going up.
China Security & Surveillance Technology (NYSE/CSR) moved up $0.92 per share, or almost eight percent, on Monday on double its normal trading volume. Like just most U.S.-listed Chinese stocks, this one is near its 52-week low and, by any reasonable measure, is considerably undervalued given its business prospects.
I think CSR is a stock worth following considering how well it outperformed on a day when the broader market was in somewhat of a panic. Something might be up with this company. Institutional buyers might have been spending some of their money.
There’s no doubt in my mind that a lot of individual investors must be feeling mostly helpless right now. There isn’t much you can do in an environment like this. Institutional investors have the benefit of investing other people’s money and most of these investment managers get paid no matter what the market does. With a considerable amount in cash reserves in most mutual funds, these investors must be the ones buying stocks as they move lower in price.
I wouldn’t be surprised if there are interest-rate reductions in the coming months. It is difficult for policy makers to sell price stability to the public when the economy is tanking.
What’s telling for me about the current state of things is that everything is correcting hard — housing prices, stocks, oil, currencies, gold, other precious metals, agricultural commodities, and even bonds are having a difficult time. It’s not over yet.