Old News is Good News

Today the stock market was down about 1.5% because of the recent jobs report, which showed the first negative numbers in 4 years. Not surprisingly, many of the jobs lost were in the financial sector (i.e. mortgage lenders). However unsurprising this is, the financial media seems to think that this "news" is new. In fact it is quite old, and has already been baked into the stock prices during the subprime lending meltdown, since who can seriously consider that mortgage lenders would not be cutting jobs in this environment?

So the fact that the market is acting this way, based upon old news, is actually good news. Why? Because the market is more attractively priced based upon a short-term over-reaction. Weakness in the financial sector and this type of "news" are making short-term investors more cautious, but for long-term investors we gain entry into a market that is setting up its next base. Remember that the stock market climbs a wall of worry, fundamental earnings are very positive, valuations are good, and interest rates are still historically very low.