Fundamental investors rejoice! OK—the worst trading week since the beginning of the pandemic back in the early part of 2020 doesn’t seem like a reason for joy, but for those of us that like to look at stocks in a fundamental way, this recent weakness has been a welcome development. For those unfamiliar with fundamental analysis, and there seems to be many “investors” lately that care little for such things, it involves caring about such things as profits, positive cash flow, dividends, solid balance sheets and good management with a vision for profits growing into the future. And those are the kinds of companies that we are currently holding and that you should be looking for to add to your portfolio. And even better news, some of those companies have been caught up in the selling and can now be added to a portfolio at much better price.
The economy still looks solid to us and the Federal Reserve is finally starting to normalize monetary policy, which is contributing to the normalization of the stock market—and is another development we are happy to see. Inflation should start to come down over the next several months as workers come back as the Omicron spike in Covid cases declines rather rapidly and the Federal Reserve continues to slow the flow of money into the market by ending their purchases of bonds. The ride will be bumpy over the next couple of months and there is no huge hurry to attack your purchase list, catching the bottom is next to impossible, but this rocky ride is setting up for a much better investing environment in our view and one that will benefit investors that are serious about their investments.