Equity Markets Will Be In A Volatile Trading Range

"In equities though, investors seem to be obsessed with “what the stock market will do” because they focus almost entirely on stock market indices. There is a possibility that equity markets will move, in 2010 and thereafter, into a volatile trading range as was the case in the 1970s. The point I wish to make is that good stock selection is at least as important as, or even more important than, “guessing” where the markets will go. Even in recessions and down-markets, some companies can continue to thrive.

I think it is important to understand that in emerging economies, where markets are far from being saturated, companies that execute well can continue to grow even in a poor economic climate. So, investors should focus on identifying well-run and promising companies, and fund managers who are conservative, disciplined, and focused.

Still, I continue to notice a large number of stocks all over the world have recently broken out on the upside with heavy volume. I concede that some stocks have also broken down, but for now there seems to be a preponderance of upside breakout moves, which suggests that a bear market is not imminent. Therefore, I would still use market corrections as an opportunity to add to positions in fundamentally sound companies."

in www.business-standard.com

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.