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Cash and Headlines Driving the Market!

With 100% of second quarter earnings released more than a month ago, the question posed to me numerous times is what is driving the market up and down? This is a great question and in this case, I believe it is two-fold, cash and headlines.

We are all thankful that the market bottomed on March 9th and bounced almost 20% in the last 16 trading days of the first quarter. This bounce was driven primarily by cash on the sidelines that saw the buying opportunity of a lifetime. Then the next round of cash came in during the first half of this quarter from people fearing that they would “miss” the rally. As a result the markets went up to levels that concerned us. Now, people are realizing that the stock market’s current value cannot sustain itself without earnings and is headed down with the fear of the Iranian election dispute and the continued nuclear saber rattling of North Korea.

The key to managing your assets over the next six months will again come down to patience and discipline. Regardless of earnings or social/political events around the world, our discipline of only buying something of value will come in handy. We are not worried about the current 5-10% correction. In fact, we are hoping for a little bit more of a pull back so we can buy some additional small and mid size company bargains. Do not be surprised when the market dips on headline news, we start to buy.

Have a great week!

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