Dana Blankenhorn

Staying Optimistic

Wall Street is having a typical bear market. Stocks are down about 20%. There is an ongoing effort to re-test the lows.

But all the data is pointing to growth. Inflation is declining. Companies are hiring. While a recession is still possible, it’s probably priced into most stocks.

The biggest problem is that we’re an outlier. China is falling. Europe has fallen. Developing markets have ceased developing. If anything, the dollar is too strong. It means we’re importing deflation, but we’re exporting inflation. The U.S. is the world’s unquestioned economic leader, and even if things were a bit worse, they’d be pretty good.

So why are people like Robert Kiyasaki and Michael Burry predicting doom? Two reasons.

What Tech to Buy

With most tech stocks now down for the year, it’s time to talk about which to buy.

The answer is simple. Buy technology that cuts costs or creates value.

There’s a lot of stuff that does neither. Crypto doesn’t, so Coinbase (COIN) and Robinhood are out (HOOD). The metaverse has yet to get a killer app, so Meta Platforms (META) and Roblox (RBLX) can wait.

The other Cloud Czars are fine. Salesforce (CRM) and ServiceNow (NOW) are fine. Adobe (ADBE) is fine. The cybersecurity stocks like Palo Alto (PANW) are overpriced, but over time they will come good.

Then you want to look at efficient users of technology. On the consumer side this gets you into the retail space. It means you can buy Costco (COST) and Walmart (WMT), Target (TGT) and Lululemon (LULU). On the business side there are a bunch of industrials you can grab, like John Deere (DE) and Johnson Controls (JC).