One sector economy

Lately, everyone seems to be down on the economy however, sometimes - as the saying goes : the way to make money in the market  is to notice when the majority were wrong about something and bet against them. That doesn’t mean in any way being naive when approaching this principal. It would be non-objective in our part, assessment-wise ; if we diminished or denied the serious impact and pressure, that the sharp deterioration in the value, of nonprime mortgage securities caused in the market.

Clearly, the situation resulted in an increase in uncertainty about the value of a much larger amount of financial assets exposed to that risk in the financial sector - thus prompting the creation of a very challenging funding environment. However, this scenario shouldn’t be confused with the overall status of our economy. Something that most analysts are failing to recognize.

You see, even if the U.S. economy expands more slowly, the global economy, based on latest IMF revision reports - is set to grow by a solid 4% this year. The developing world’s unstoppable push towards economic growth will continue. Yes, inflation remains in uptrend and commodity prices are likely to continue to rise but - that won’t change the fact that the outlook in our economy remains optimistic.

Whatever happens, corporate earnings outside of the financial sector (very important to make the distinction here, separating the financial sector from economy in its entirety) will hold up just fine during fiscal ‘08.

Keep in mind, successful investing more often than not - involves focusing on individual stocks and strong sectors. At some point external negative factors will diminish their influence on the market and the positive aspect will go dramatically higher. We are getting much closer to this turning point than most investors realize.