One of my mantras is to purchase shares with quality and attractively valued dividend growth companies every single month when opportunities present themselves. Opportunities come in many varieties, and I generally look for 3-4% drops in the market to pounce on quality stocks. As a value investor, I'm strongly hoping for a strong correction in the markets. When stocks are cheaper, I can purchase more stocks for the same amount of capital. A high flying market looks good on a balance sheet, but can actually impede long-term performance.
The S&P is up 13.64% over the last 3 months. Is there more strong performance ahead? It's impossible to say. I never try to predict the future, I simply react to circumstances presented to me. I am hoping for a correction, however, even a mild one. A correction is typically defined as a 10% drop in the markets, and although I don't necessarily think that's likely right now a 5% drop or more would be very welcome.
Although the S&P 500 has been strong over the last quarter of 2011, the index was essentially flat over the year. That's something one should keep in mind. Purchasing stocks in January 2012 should present similar opportunities and prices to what one would have seen in January 2011. It seems a lot of your secular consumer stocks have performed very well, especially MCD, while cyclical stocks in industrial and tech industries still present some value. Health care presented some of the strongest values in early 2011, but with a strong run of late by companies like Abbott Laboratories (ABT) and Medtronic (MDT) there is less value to be had.
Remember: price is what you pay, but value is what you get. That's true with anything and stocks are no different.
What are you looking at? See any strong values out there?
Full Disclosure: I'm long ABT, MDT
Thanks for reading.
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