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Market Update June 10, 2011
Posted on | June 10, 2011 | Comments Off
The Dow closed the week under 12,000 for the first time in several months. The markets are down roughly 6.5% since the highs at the start of May.
The correction is nice for the stocks we’re looking to buy such as the ones in the dividend portfolio. For example, Walmart is trading under $53, Microsoft is under $24, Raven Industries is under $50, Philip Morris Int’l is under $68. These aren’t screaming buys at current levels, but they are indeed improving and becoming more attractive.
While it might seem like stocks are doing terrible, a 6.5% correction really isn’t much. The length of the correction is more interesting in that we’ve locked in six straight weeks of declines. In the middle of 2010, we saw a roughly 15% correction prior to the announcement of QE2.
Many of course speculate that the markets are responding to the fact that QE2 is ending at the end of the month. We mentioned we expected increased volatility in advance of it and we are indeed seeing it. I think it continues at least in the near term. Another round of easing will be tough to justify unless there is a severe correction in the markets, much more than 6.5%.
As for now, we’re still waiting to pull the trigger on more buys. It’s getting closer, but we’re not there yet. We’re sticking to our strategy and remaining patient.