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The Stock Market Takes a Breather After a Strong Run

It is a marathon not a sprint. Pull backs are always expected. Investors needed a water break.

The stock market and economy are both in relatively good shape right now. After a stellar nine-week run, the market is taking a well-deserved breather. However, the underlying economic data remains strong, with a robust jobs market, confident consumers, and even some recent signs of moderation in interest rate hikes.

While the “Mag 7” tech stocks have dominated the headlines, many investors are starting to look beyond them for value. There are exciting opportunities in other sectors, such as healthcare, energy, and financials. This diversification could help to protect your portfolio against potential downturns in the tech sector.

The recent December jobs report was a testament to the strength of the US economy. Employers added a whopping 216,000 jobs, exceedingly even the most optimistic forecasts. This is a clear sign that businesses are still confident and willing to hire, even in the face of economic uncertainty.

The stock market, like a mountain climber, is never a straight line up. There will be periods of rapid ascent followed by inevitable setbacks. However, the long-term trend is always towards higher peaks. Investors who focus on the fundamentals and build diversified portfolios for the long haul are the ones who are most likely to reach the summit.

Key Point:

  • The stock market is taking a breather after a strong run, but the underlying economic data remains positive.
  • Investors should look beyond the “Mag 7” tech stocks for opportunities in other sectors.
  • The recent jobs report is a sign of the US economy’s strength.
  • A long-term perspective and a diversified portfolio are key to success in the stock market.
  • Global events, which haven’t been a factor, could be in the future. However, the economy and the stock market have not had an issue with the events.  Investors should always practice risk management as global conflicts can have a substantial impact on portfolios.

Last year it was all about asset protection with income.  Focusing on value stocks gave investors long-term protection with income.   Investors should always focus on risk management but opportunities in growth stocks are becoming more attractive.  Investors with a long-term vision should focus on quality growth with risk management as a focus.  Investors focused on value stocks for the last year should be getting great dividends and should begin to reinvest dividends in growth.  Gradually but buying on negative downturns.  The economy is strong, and the US economy is the strongest in the world which will eventually pull every other country up.  Confidence is high but we should always be cautious not to just follow the herd.  Discipline and patience are key to long-term financial success. 

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