LANGE FINANCIAL SERVICES MARKET COMMENT. July 28, 2013 6:00 PM
During the past two weeks the market essentially paused after recovering into July from the almost 1000 point June decline. The late 160 point rally from the lows Friday brought the indexes back to their all time highs. Again, the market forecasters are out in force calling for a correction as most have done during every pause since January 2013 and even earlier. While a correction is possible for a multitude of reasons, especially in the historically slow month of August, we prefer to maintain a positive attitude and view profit taking in stocks as an opportunity to accumulate shares in quality growth companies. Gross Domestic Product to be reported this Wednesday at a disappointing approx. 1% growth could create an excellent buying opportunity.
While this is not to be viewed as a projection, the market did sell at 20 times earnings in 2007 with interest rates in the vicinity of 6%. Considerable amounts of cash is awaiting a market pullback to be deployed. Forecasts for the S&P 500 are in the vicinity of $110 for this year and $120 for 2014. Thus considerable upside remains possible, particularly on a selective basis. A similar valuation to 2007 would suggest an S&P 500 of 2000 or more.
Investment emphasis should remain on the growth merits of individual growth companies and not have excessive concern on overall market volatility. Some of the stocks on our ” Favored Stocks ” list have enjoyed considerable appreciation in recent weeks. We would take some short term TRADING profits on further strength and await an approx. 4% to 7% pullback to purchase again or add to positions.
Favored Stocks July 28, 2013
Bank Of America