HAUKE: It’s too early to panic about latest market woes

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The market gets a little roughed up and, all of a sudden, everyone is scurrying into the corner like roaches when the lights
are turned on. And while the roaches may yet rule the day in the market, that day is still a decent way off, and being afraid
now has the potential to cost you over the coming months.

There is an old saying on Wall Street that bull markets
climb a wall of worry. I think most of us agree that, if you incline your thoughts in that direction, there is plenty to worry
about. A lot of people are out of work and the jobless rate keeps climbing. Words and phrases like recession and tough economic
times still dominate news stories. These are not the conditions that make you feel like throwing a bunch of money into the
stock market.

At the same time, bull-market peaks aren’t usually reached until all the headlines are rosy
and people see nothing but good times ahead. I admit to having serious doubts regarding the long-term viability of the global
economy, mostly due to the unthinkable amount of debt we have all taken on, but those problems may not begin to seriously
threaten the market for another six to 18 months.

Over the last 100 years, the average bull market has lasted
about 3-1/2 years with the Dow Jones industrial average doubling in price. If the current run goes the average, we have more
than two years and thousands of Dow points to go.

It is not unusual, however, to see a few gut-wrenching disturbances
along the way. The last bull market from 2003 to 2007 experienced an eight-month period in 2004 with the market stuck in an
8-percent range, with no new highs from February to August of that year. Investors were locked in a range-bound situation
for the entire year in 1994. The market would go up a bit, fall 8 percent or 9 percent, go back up about 7 percent or 8 percent
again, then repeat the cycle until the bull market kicked off again in early 1995. That is about the worst I expect for us
over the intermediate term. And with the market already down almost 6 percent from recent highs, you should have a buy list
ready.

I just happen to have a few ideas lying around. On a global basis, China has been the most beat up during
this correction. The selling has taken FXI, which is the exchange-traded fund most closely correlated to the Chinese stock
market, below its 200-day moving average. Even though odds are China still sees a new high in coming months, the prospect
of that happening are a little less today than a few months ago. Until China shows some effort to regroup (firmly retaking
and staying above the 200 day), it is more situated for the highly aggressive investor.

The best opportunity
throughout this pullback may be right here at home. Utilities and non-cyclical stocks like alcohol and tobacco makers are
poised to continue running after this correction plays itself out. The easiest way to play these sectors is using the ETFs,
with XLU for utilities and XLP for non-cyclicals. Putting money to work in the near term may require a little patience, but
at this stage of the market cycle, the reward over the next few months should be well worth it.

At some point,
this bull will start becoming a more difficult animal. Corrections will get a little nastier and stay a little longer. We
may be only a few months away from this more challenging environment, but I want to point out that solid profit opportunities
will still present themselves. You simply have to exercise more patience and demonstrate some discrimination with your buy
list. I will do my best to alert you when I think the market crosses into the higher alert stage.•

__________

Hauke is the CEO of Samex Capital Advisors, a locally based money manager. His column appears every other week.
Views expressed here are the writer’s.

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