Green on Monday

10/20/2012
We’re in for a green Monday. My baseless optimism comes from what I perceive to be as an overreaction to the negative numbers on Friday and the inherent strength in my portfolio. Investors have been very worried over the last couple of years, and that was with good reason. The market has been unforgiving at times and the volatility can be hard to stomach. The weak fundamentals over the last couple of years have not slowed what has largely been a consistent rise in equity prices. This underlines the positive outlook beneath the skepticism of the average American.

When I look at the growth in the US economy over the past couple of years, I can accept the unacceptable comeback because I know it is not going to turn and continue heading downwards. The strength of American enterprise is not something to be overlooked, and I guarantee you will lose if you bet against it. Over the next one to three years, I envision a stock market that grows proportionately to the slow growth of the economy in addition to equal amounts of growth brought on by inflation.

In these aspects, I feel well positioned. I own multiple large, fundamentally strong companies which will remain largely sheltered from intraday hoobla. I expect to see modest gains as people continue to realize the figurative strength of our economy and regain confidence in the market. In addition, I will escape the inflation which Bernanke claimed is coming. It is possible he doesn't let it drift too much further above 2%, but I believe he thinks he will receive a better blurb in the history books if he allows for a decade of inflation instead of a Japanese decade.

Alright, lets get specific...

Emerson (EMR) is attractive to me because of its low risk and high dividend (3.32% paid 9/10/2012). The fact that Emerson stock is not going anywhere quickly is a reasonable attribute during times of volatility. It is psychologically stabilizing to have a stock that always seems to be slightly in the green. At the moment, Thomson Reuters has pooled analyst forecasts which predict a 12 month price target of a $48 Low, a $54.7 Mean, and a $60 high.

Microsoft (MSFT) was a stock that I originally bought on the fact that all the investment fund managers were screaming about it. It worked and I made a bunch of profit when I sold it. I reentered on recent, subsequent dips in the market, but the performance of the stock has me worried. The lack of PC sales is eating their revenue, and even if Windows 8 is as great as I think it will be, it may not matter. I am currently very long on the stock which may change if the recent gaps are not filled, which would put me in the green.

DSCVX is one of my largest holdings, and I could not be happier with it. It has risen a hair under 40% over the last year, and it has a five star rating from Morningstar. Its performance warrants little more critique. 

I will give a rundown on my other holdings at a later date.