Wednesday, December 5, 2007

Strategy Continued

Being short term bullish continues to be the best strategy. The sentiment has been much to negative, and I've focused on that as factor for stocks to run higher. The Fed appears poised to cut rates again next week, although I'm not sure its necessary. Productivity stats continue to come in strong, showing the increasing efficiency of US businesses. The outlook does remain somewhat cloudy for the US, but what does this mean for stocks? The short answer is nothing. We've got to continue the strategy that has worked. Look for companies with revenues in growing overseas markets. Also, focus on strong brand names.

I see value in a company like Cisco (CSCO). They are tremendously positioned in international markets. Their outlook has been questionable because of a potential decrease in spending in US financial companies, and this has allowed the stock price to be beaten down. This gives investors an opportunity to buy a stock with good potential for a good price. The key is determining how much potential is there for a slowdown in US revenue. I see it as a positive risk/reward scenario based on current valuations.

The biggest risk in the US is not letting the market correct itself. There will probably be more pain ahead for a lot of banks, and there will be some buying opportunities. They are cheap now, but I think there will be more opportunity soon.

Brokerage projections for 2008 S&P results are almost all higher.

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