This IS different than 2008

Phones have been ringing; nearly everyone is concerned on some level about a repeat of the 2008 meltdown. However, the current environment is very different from the 2008 timeframe. Back then, the decline was liquidation driven as leveraged investors, forced to de-leverage, needed to raise cash fast. Because of the financial sector’s malaise, sellers could raise cash the quickest and get the best prices by selling the ‘better’ assets on their books, this inability to sell the ‘junk’, made the decline worse as it penalized holders of quality investments almost as much as holders of low-quality securities.

Today, there are no forced liquidations and 80% of US companies reporting second quarter earnings have exceeded earnings forecasts. In fact, S&P 500 earnings growth for the second quarter is now estimated at +20.4%. US corporations are in great shape. Despite this, unemployment is still high and will likely remain high for several reasons; unemployment benefits discourage would be applicants, worker skill sets are inadequate and corporations are making do with fewer employees.

In this extremely low yield environment there is no competition for the stock market. Investing in equities serves as a hedge against inflation and captures productivity growth. Dividend paying stocks provide the best of both worlds; appreciation potential and income potential. This pull back has created some compelling values as the S&P 500 is now 100% over sold.

As always, I am here to answer your questions & address your concerns.


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