A little Caution...

A nice correction, huh? I have to admit so far the companies reporting have issued disappointing 2006 guidance. I’m sure many of the companies are issuing more conservative guidance than usual so they can easily beat it, but I really think there’s a lot of uncertainty about the economy for 2006. There’s the recent spike in oil prices, but more importantly there’s the inverted yield curve. The inverted yield curve is telling me that the economy will be slowing in 2006. The stock market is forward looking and I believe it is starting to price in a slowing economy. The recent earnings reports and guidance just reinforces this notion. So what have I been doing? Not much except for my Roth IRA contributions. I still have a nice cash position for new opportunities. Believe it or not, I really like the big cap pharmas right here. So much bad news is priced into these stocks that any piece of good news will send these stocks up. An example of this was Pfizer’s (PFE) earnings report. This one still has more room to go. We have some more big earnings reports coming up: Amgen, Johnson&Johnson, Microsoft, etc… Overall, this correction is just a small blip in the big picture, as I don’t see a dramatic economic slow down…