Consumers are likely to pull back on
their spending with a disturbing impact
on corporate profits. An earnings
recession is already underway.
In
this environment, non-cyclical stocks
producing consumer-essential products
should be favored. Likewise, unloved and
those securities offering better valuation
levels should perform relatively well.
The excesses of the past, most noticeably
in the real-estate area, are now punishing
the economy. Regrettably, this suggests
a bear market is probable. Investors
should avoid a buy-and-hold or indexed
approach. Instead, a well-researched,
nimble strategy will help investors enjoy
the strong rallies that typically abound
in volatile markets.
Small stocks are looking more attractive
and should fully bloom at the market
bottom. Until then, investors should favor
large stocks.
