How to survive a tumultuous stock market? Convert now
Paddington area, London. July 2022.Image by Tim Sandle
The economy and stock markets continue to be affected by the global financial situation. This includes markets in the United States where economic reports do not read well. Currently, most markets are bracing for another interest rate hike as central banks seek to control inflation.
Mike Loukas, CEO of TrueMark Investments (former Chairman and CEO of USA Mutuals), offers intriguing thoughts on where the markets are heading and what drives them to move. Digital newspaper.
Loukas says much of the current situation can be traced back to what happened and the actions taken in the wake of the pandemic.
According to Loukas: “The basic premise is that things weren’t going as well as they seemed coming out of the pandemic. There was pent-up demand due to lockdown fatigue, government stimulus etc, but there were also underlying concerns such as staff shortages, supply chain issues, l inflation and the re-expansion of overheads.
However, there is another way to look at it, says Loukas. He notes: “Conversely, things are not as bad as they seem at the moment. Inflation is still a problem, but the Fed is slowly but surely moving away from various types of stimulus (low rates, debt buybacks).
What is important is how the companies reacted and how they interpreted the signals. Loukas says, “Companies have had the opportunity to lower their expectations and forecasts, allowing the optics of the earnings season to create more positive momentum.”
Loukas adds in the context of the market pendulum swinging from one extreme to the other: “The next step will be to find a more reasonable middle ground. An area where business performance should matter more. »
This bodes well for many industries, but especially for technology. This sector has taken the brunt of the correction, but still includes the best secular growth stories an investor can find.
Here, Loukas notes, “Macro headwinds have created good-sized expectations for these companies and the catalysts for their secular growth and accelerating fundamentals aren’t going anywhere anytime soon.”
What companies need to focus on is: “Cloud migration, global digitalization, artificial intelligence: these are not just pandemic themes, and now many of the top companies in these segments have resurfaced after the correction with attractive entry points.
A well-planned digital transformation program can help streamline operations and improve customer service. A solid strategy can also increase employee efficiency while reducing overhead.