06/05/2024
When Bad News Becomes Good News… Why Stocks Can Do Well!
Sometimes the stock market is all mystery it seems. A company reports really good earnings and the stock goes down 10% anyway. What gives? It’s because markets are always looking forward. It’s not basing it on the current results, but what it means for the future. This confuses investors.
It applies to the broad stock market and the economy as well. The economic news is finally starting to show some cracks….meaning some things are slowing down. See the recent headlines.
US factory activity, construction spending both fall!
But as a stock market investor I will cheer this all day long! I have been waiting for this. Why? because it means demand is softening and inflation is coming down. So why is this good news Mike? Because it means the Fed can finally relax a little bit and maybe even cut rates at some point in an effort to re-stimulate the demand (The Central Bank of Canada cut their interest rates by 1/4% today). Bad news means good news because it may mean lower interest rates ahead, and lower interest rates in all likely hood mean higher stock prices too.
My plan is to stay invested and add on any dips this summer and this fall. Please email or call for a visit.
Cheers!
Mike