All you need to do is go to Yahoo! or MSN to know that the finance world seems to be shuddering with all the macro events taking place.
Chinese Stock Market is Collapsing!
Greece is Exiting the eurozone!
Puerto Rico is Defaulting on Debt, Hurting U.S. Mutual Funds!
But surprisingly, U.S. stocks are trading remarkably well in the face off this uncertainty. Sure, stocks are down on Tuesday, but on Monday showed strength that bull markets are fueled on. After Greece pulled the S&P 500 down by more than 1%, the market was able to snap back and climb 0.6% on the day.
1%…0.6%…who cares? Sure, these are small moves, but when they happen as quickly as they did on Monday, it is indeed impressive on some level. Over the past week, the index is down just 1.5% and less than 1% over the previous month.
That's great, considering all this bearish news. So what about owning stocks in environments like this?
While I wouldn't say owning any and all stocks is a good idea, owning our Future Blue Chips stocks are holding up relatively well. Disney DIS continues to make new all-time highs, while Starbucks SBUX hovers close to its record levels.
MasterCard MA and Visa V are also doing very well, both within a few bucks of 52-week highs. At some point, these stocks won't hold up as well and if the broader market declines significantly, these likely won't be exempt.
But the businesses for each of these companies will remain strong, regardless of what the stock prices do. And that's sort of the point: Nothing is changing with the business. So even if the stocks are suddenly worth 5%, 10% or 15% less than there were at the highs, doesn't change much regarding the long-term.
When you have businesses that continually grow sales and earnings, you don't worry about stuff like this, even if it means your portfolio may be worth less over a one to three month period.
That's okay too, because we're not focused on the next 1 to 3 months, but rather, the next 1 to 3 years - at a minimum. This doesn't fit for every stock, investment or trade. But for the companies that you want to own, not just invest for short-term catalysts or trade.
In fact, short-term pullbacks in non-recessionary environments are generally a rewarding move for those that buy their top stocks. So embrace the volatility. Make the changes in your portfolio that's needed, but don't bail on the companies you want to own - like the Future Blue Chips' Core Four, consisting of Disney, Starbucks, Visa and
Disclosure: I am/we are long DIS, SBUX, MA, V.