Kiplinger’s suggests the market is suffering more from the “mood of investors” than fundamental weaknesses: “Outside of real estate and the financial sector, there haven’t been unusually large numbers of profit warnings, dividend cuts and other signs of serious distress.” It notes:
- 64% of reporting companies exceeded analysts’ estimates for Q4 results;
- 11% of reporting companies matched analysts’ estimates for Q4 results; and
- Reporting companies’ Q4 profits rose 18% on average from Q4 2006—if you exclude financial companies.
The overall recommendation of the article is for long-term investors to stay 60-70% invested in stocks (including stock funds). For the full article, see the April issue of Kiplinger’s. (At the time of this post, only the March issue was available online.)