Sunday, December 30, 2012

Stocks: Too High to Buy, Too Low to Sell

There often are times when the odds do not favor widespread buying or selling in the stock market.  That happens when indicators of valuation, price trends, and sentiment are mixed.  Stocks are not extraordinarily cheap or expensive.  Price trends are not notably depressed (and likely to recover) or sharply higher (and likely to decline).  Investor sentiment is neither gloomy (a good time to buy) nor ebullient (a good time to sell).

At such times, one needs to focus on individual stocks that are reasonably priced or on themes relating to a particular market sector or societal trend.  I think today is such a time.

I still find a small number of stocks that are attractively valued (VOD, AGXXF, AAPL, MOFG, KSS, FDP).  In general though, after the sharp rebound since June of this year and the doubling of major stock indexes over the past four years, I urge caution when considering making large new stock purchases.  This is despite a likely rebound in stock prices if elected officials in Washington make meaningful progress on spending and taxes.

Steve Lehman

S & P 500:  1402

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