Stocks rebounded in July after a slow June. Small company stocks continued to lead the rally since mid-February with rocketing prices through July. They are now close to the high prices of a year ago while larger company stocks have moved ahead of a year ago. We still think that stock prices have yet to peak before we will expect a major correction.
There has been much talk of too high stock prices lately. Times of low interest rates and low inflation have historically been times when stock prices per earnings (P/E) have risen. Low yields and low interest rates drive money into stocks. U.S. equities are more in demand worldwide than ever. Even though stock prices have increased, stock earnings are even higher and the P/E ratio has actually lowered. Stock earnings improve stock valuations and the prospect that prices may continue to rise for some time. All this suggests that we may continue to enjoy a generally rising market for now.
Crispy lawns and parched gardens welcome some rain to break the long drought. The fountain draws more birds than the feeders. Mulch makes the difference in the summer garden, conserving the juices that nourish. Resilience and tenacity are key qualities in plants that must survive harsh weather cycles. Meanwhile extended sunshine has been great for vacations.
