Given the performance of the main stock market averages, I guess we can assume that the credit crunch is over. Of course, there is the question of just about everything else in the economy, not to mention the real estate market. Oh, I forgot about record oil prices. Just a few months ago, the stock market was reeling on oil price stories.
The stock market really doesn’t seem to be rational lately and I’m worried about what’s coming. I have to say, however, that corporate earnings on balance have been solid this first quarter. I know it’s early for corporate earnings results to be reflected by the slowing economy, but I can only surmise that investors just don’t want to know.
We’ve had enough bad news for a while and investors want to think about the future. The stock market is always good at thinking about the future. Given the market’s recent rally, the majority of investors must be thinking optimistically about the future, despite how long it might take.
I’ve come across all kinds of great companies out there that reported excellent financial growth in the first quarter. Many of these smaller companies continue to be undervalued given their growth prospects.
Everything in the stock market occurs in waves and, ever since the subprime mortgage meltdown and the ensuing correction in stock prices, investors haven’t been interested in smaller-cap companies. I think that this year is going to be a turning point for small-cap stocks and that now is an opportune time to be speculating in this area.
I’m biased, of course, because small-cap stocks are what I love to research. Still, even though it takes time, tomorrow’s profits are often today’s laggards.