The Dow Jones Industrial Average (INDEX: ^DJI) took a beating overnight, falling the most since the massive 2.5% sell-off on June 1.
Energy was far and away the hardest-hit sector. The drop erased the entire week’s gains, and underscores the market’s virtual yawn at the Fed’s extension of Operation Twist.
What ever happened to all that euphoria following the Greek election result? Easy come, easy go.
US investors who lined up for trading got shot down by a firing squad of weak economic data:
- The Philadelphia Fed manufacturing index fell to -16.6 in June, following a 5.8 drop from May. The report contrasted sharply with an expectation for improvement.
- Existing US home sales for May were in line with economists’ expectations, but down from the prior month.
- And then there are US jobless claims. While showing a 2,000-claim improvement over the previous week, the four-week average has hit a high for 2012.
What it means
Prepare for a bit of a broken record here: The drop, with the ASX naturally following suit, and a lack of enthusiasm surrounding the Fed’s actions underscores the fragility of the US overall economy. China’s economy continues to slow too, as witnessed by the pasting BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) shares received overnight in the US, both down 5%.
Now that we’ve said that, let’s figure out how to make some money off it.
Even though the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is largely flat on the year, some blue chips have been flying.
These companies have all excelled in 2012 because they are great companies, bottom line. They hail from four very different industries, but all are undeniably top dogs in execution.
It may sound too good to be true, but at times like this when the seas of instability are churning — as evidenced by the 14% spike in the Volatility Index (INDEX: ^VIX) today — we patient investors can crush the market by buying great companies just like these for the long run. It’s not rocket science; it’s quality investing.
How to find these winners
Sometimes finding a great company may feel like finding a needle in a haystack, but they are out there.
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