The Stealth Correction Rages On

The market is becoming extraordinarily frustrating now that distinct good news, initially greeted with cheer and higher share prices, fades into a haze of worries that may not even materialize down the road. What is even more frustrating is that while the market is down fractionally for the year, the fact of the matter is that we are in the midst of a pullback of blue chip stocks, and a correction of smaller cap names.

There is a lot of noise in investing when it comes to quarterly earnings reports, and the notion of measuring success based on a calendar year. How many people close all their positions on December 31^st, only to start all over again on January 1^st? It is actually really dumb and misleading in so many ways. However, with that in mind, here is the real situation that is more reflective of your portfolio than the fractional declines for the year. The average stock in:

• S&P 500 -10.4% from 52-week high
• S&P 600 -19.0% from 52-week high

This rally has been the most stealth and the most hated, so far in my lifetime; it is no surprise that the pullback is not properly portrayed. The pain and anxiety you are feeling is authentic, but it is also part of investing. There is a cyclical aspect to investing that is inescapable. Now is the time to understand and to be sure that you are riding out the bumps; holding shares in companies with great potential and closing those that are clearly broken.

I am excited about the values being created, although I know it will shakeout a lot of people who have missed the majority of the five-year rally.

Sentiment Swoon

I know individual investors who have never been wildly enthusiastic about this market; not even a few weeks ago when the market was at all-time highs. Now, there is soaring bearishness, which is a perverse positive from a contrarian point of view. Weaker hands are selling stocks… no matter the fundamentals or potential.

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69 Years Proves Nothing Is More Destructive Than Progressivism

Two days ago, marked the 69th anniversary of the atomic bomb being dropped on the Japanese city of Hiroshima. Aboard the Enola Gay, the bomb, code-named 'Little Boy' killed 80,000 people, instantly. By years' end, 140,000 more people succumbed to their injuries. Three days later, a second atomic bomb, this time called 'Fat Man' dropped on the industrial city of Nagasaki.

We all know the horror that occurred in the aftermath of these atomic bombs which were dropped, and its unimaginable that such weaponry would be employed again in the future.

Japan was beyond broken at the end of the war. In the meantime, America was rising in its peak of power and influence. During its peak in the 1950s, Detroit was once known as the “Paris of the West.” The city decided it was time to share the wealth and divvy up the loot. It effectively became a homegrown example of progressive politics, and the inherent greed that followed masked as fairness. Have you seen any recent photos of Detroit, lately? Take a look. Now, look at Hiroshima.

At the end of WWII, Russia had dreams of becoming a world power. Its ideology consumed Americans and brought the country to its knees without the communist firing a single shot.

A variety of factors dashed that dream, primarily because communal societies go against the DNA of human beings. However, Russia is still pushing the envelope and their saber-rattling has American investors on edge. Last night, President Obama authorized targeted US air strikes to support US military advisers and humanitarian aid in Iraq. (Still not sure how this works: we helped topple Gaddafi to avoid the slaughtering of his own people, watched Assad slaughter his own, and perhaps, waited too long to help Iraq stop ISIS or ISIL.)

I have a feeling that this leading from behind thing is going to result in a worst-case scenario in both Iraq and Ukraine; and the market seems to have that feeling, too. Moving global peace backwards does impact the market, but to what degree remains to be seen. More than likely, most names in your portfolio will not be impacted materially, but it is still unnerving. The market is at a critical support point and must make a stand. The stealth correction rages on in small caps; and large caps have been scuffed up pretty good. It has created cheap stocks and opportunity, palpable fear and anxiety as well.