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Strong fundamentals

The November election held my attention like no other; it was more like watching a football game than an election. However, when I awoke on Wednesday morning after staying up too late on Tuesday night, it was time to get up early and go to work, whether my candidate won or not. When I got to the office I found that a lot of other people did the same thing; some were disappointed and others were excited, but they all were ready for another day of work. There were a lot of emotions and uncertainty tied into the election cycle this year but now it is time to move forward and focus on the future. I am truly hopeful that we can get back to a more united state.

The election, energy costs, Iraq and weakened earnings from some companies have contributed to an uneasy financial market over the past months. I am hopeful that with the uncertainty spawned by the election behind us, the gridlock we have seen recently will begin to ease.

The stock market has been essentially unchanged so far this year, while earnings are estimated to have increased by 20 percent. It would seem that equities remain undervalued at this point in time. Manufacturing activity remains strong and should be long-lasting. The passage of recent legislation (the American Jobs Creation Act of 2004) could bring more than $300 billion back into the U. S. economy from foreign profits which could be reinvested here to create more jobs. Remember that investments perform based upon fundamental valuation in the long run.

Emotions can sometimes cause people to overlook either strong or weak fundamentals. Real estate is a good example of an exciting potential investment these days. It is easy to get caught up in the hype, but go slowly, do your homework and make sure you know what you are buying. Stocks are another potential investment. It is important to weigh the underlying value in the holdings and profits of the companies that you own. I was reading an article this weekend that described how the intrinsic value of real estate holdings in companies such as Sears and Kmart had been overlooked because everyone was focusing on profits. Make sound decisions based upon your individual situation.

As the momentum of the election season wanes, it will take time to bridge the gaps and reunite our nation. I am hopeful that the eventual results will be much like the baseball playoffs. When the Red Sox defeated the Yankees in the seventh game of the series, riot police were ready for trouble as both sides gathered at Yankee Tavern after the game. As it turned out, the atmosphere was amiable as defeated Yankee fans bought Red Sox fans a drink. No gloating, no fighting, no riots—just a reflection of another great baseball season where both teams played great ball. Regardless of your political affiliation, as a nation we face many challenges and it will take all of us pulling in the same direction to meet them.

Nancy Hadley is an investment representative with D.A. Davidson in downtown Sandpoint. She is currently accepting new clients. You can reach her at 208-263-2010 or via email at nhadley(at)dadco.com

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Nancy Hadley

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