Weekly Investment Update: Staying Focused on What Really Matters

1. Focus on durable businesses, not short-term rallies.

2. U.S. tech leads; Europe and Asia offer value gaps.

3. Inflation varies—pick firms with pricing power.

4. Central banks diverge—back rate-resilient companies.

5. Plan for data/earnings shocks; favor strong cash flows.

My Take on This Week's Market Action

Last week reminded me why I love value investing. While everyone was getting excited about the latest AI news and trade talk rumors, I watched big tech stocks shoot up while solid, profitable companies barely moved.

This happens all the time, and it's exactly why I don't chase trends. The market gets distracted by shiny objects while real businesses with steady profits get ignored. That's where the opportunities are.

What Happened Around the World

The U.S. market hit new highs, mostly thanks to those same tech giants. Strong earnings reports and positive trade news kept the party going from July 1st through the 8th.

Europe was quieter, but I'm seeing something interesting there. More companies are buying each other, which tells me smart business leaders think they can find good deals. That's usually a sign that values are becoming more reasonable.

Asia had a good run too. Japan and Korea led the way in the second quarter, and China helped lift the region. But here's something worth watching: China's factory prices are still dropping. That could mean cheaper costs for companies that buy from Chinese suppliers.

The Economic Picture Right Now

Let me break down what's really happening with inflation and jobs, because this affects every company we might invest in.

Inflation is cooling down in most places, which is good news. It dropped a bit in May globally. But it's not the same everywhere. Japan is still dealing with inflation above 3%, while China's factory prices keep falling.

The job market tells an interesting story. Americans are still spending money, and June job numbers were strong. Europe's unemployment went up slightly, and China's job situation is mixed. Young people there are still struggling to find work.

This is why I focus on companies that can raise their prices when costs go up and keep their profit margins steady no matter what's happening in the economy.

Central Banks Are Going Different Ways

Here's where it gets interesting. Central banks around the world are doing completely different things.

The Federal Reserve kept interest rates the same but left the door open for cuts later. Europe's central bank actually cut rates a little and is looking at new ways to encourage green lending. Japan's central bank is in a tough spot because inflation is too high but growth is weak. China cut rates to help their economy, but we don't know yet if it will work.

All this means I need to find companies that can handle whatever interest rates do. Some businesses actually do better when rates are higher, while others struggle. The key is knowing which is which.

Beyond the Headlines: What's Really Moving Markets

Trade deals make for exciting news, but the real action happens in company boardrooms. Yes, the U.S.-China trade agreement helped lift markets, but I'm watching what companies actually do with their money.

There are always risks to worry about. Trade talks with India and Europe could create problems if they go badly. We've got security issues in Europe, cyber threats everywhere, and intense competition in AI.

But here's what caught my attention: Europe saw strong merger activity, and China's deal count almost tripled. When I see lots of deals happening, I look for companies being bought for less than they're worth and managers who have a good track record of making smart purchases.

What to Watch This Week (July 9-15)

Several important reports are coming out that could move markets:

Tuesday (July 9): The Fed will release minutes from their last meeting, giving us more details on what they're thinking about interest rates. Japan will also share factory price data.

Wednesday and Thursday: European Central Bank officials will speak, and we'll get reports on Europe's factory output and business confidence.

Friday (July 15): This is the big one. U.S. inflation numbers come out, and major banks start reporting their earnings. China will also release second-quarter GDP and retail sales numbers.

Instead of trying to predict what will happen, I'm prepared for different outcomes. I stick with companies that protect my money if things go bad and grow when things go well.

My Bottom Line

This week's market moves remind me why I became a value investor in the first place. Short-term excitement comes and goes, but companies with strong finances and the ability to raise prices will win over time.

When you're thinking about your investments, focus on businesses that can handle rising interest rates, cost pressures, and global uncertainty. Those are the companies that will still be making money for their shareholders years from now.

The market will always have its ups and downs. My job is to find great companies at reasonable prices and let time do the rest.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.