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The Fed Isn't Bailing Out Anyone

I am buying shares in companies that have exposure to the global growth trade. I believe we will avoid economic Armageddon. The best time to purchase shares is when fear and uncertainty provide exceptional value. Many economically sensitive sectors are right there now. If the global economy collapses, I will have to change my position, but at this moment, I don't see the implosion.

Since I am very active, I cannot put out individual names at this time. Blame the lawyers for trading restrictions that mentioning companies brings. However, I do like individual stocks in cheap cyclical sectors like energy, raw materials, machinery, computer components, hard drives, airlines, specialty and "tween" retail, shoes and toys. Check the archives for stock mentions in the past.

I am underexposed to many traditional defensive sectors of the market, such as staples, health care, utilities and REITs. If the economy holds, their trade has passed. Maybe surprisingly, I am avoiding financials, housing, autos and other large-ticket durables. While a good trading bounce may exist here, the fundamental headwinds are simply too strong for the intermediate term. Remember, the healing process in the real estate/financial industry will take longer than many believe.

When the market bounces back, shareholders will pay for growth, even if it is cyclical. Buying companies with strong top- and bottom-line growth should provide decent returns when the financial market panic subsides. The Fed's rate cuts, as well as stabilizing economic data, should support the real economy and financial asset prices. Investors are throwing out some very attractive babies with this panic bathwater. I am buying babies, especially compellingly cheap, economically sensitive ones.
At the time of publication, Marcin had no positions, although positions may change at any time.

Robert Marcin is the founder of Defiance Asset Management, a private investment management firm. Client accounts managed by Defiance Asset Management often buy and sell securities that are the subject of commentary by Marcin, both before and after it is posted. Under no circumstances does this column represent a recommendation to buy or sell stocks. This column is intended to provide insight into the financial services industry and is not a solicitation of any kind. Neither Marcin nor Defiance Asset Management can provide investment advice or respond to individual requests for recommendations. However, Marcin appreciates your feedback; click here to send him an email. Marcin is not required to update or held responsible for updating any portion of this column in response to events that may transpire subsequent to its original publication date.
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