A Return to Stock-Picking

 | Sep 17, 2012 | 1:25 PM EDT
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With the central banks largely out of the way now, the biggest fear of many market players is that the market no longer has any major catalysts to drive it higher. After all, it has been moving higher all summer in anticipation that the printing presses would be unleashed again, but there haven't been many positives economically and there is great concern that earnings may show the effects of a struggling Europe and China.

The optimistic view is that if we are less focused on macroeconomic matters, maybe we'll have a better market for stock-picking. One of the challenges of the market for quite some time is that we have had to constantly dance to the next major headline. It didn't matter what stocks you were buying, as most would move in tandem with the news.

Many market players enjoy navigating major economic headlines, but I've always preferred individual stock-picking. There is nothing better than digging for undiscovered gems and buying them as the market starts to embrace them.

I've written often in the last few years about how the market doesn't have the same upbeat sentiment and is losing the individual investors who provide much of the excitement. I believe one of the major reasons that has occurred is that stock picking has become much less important. Efforts are not rewarded and even the best stock picks can result in losses if you aren't in tune with the macro environment.

Now that the central banks will not dominate the action to the same degree, it will be a good time for stock-picking to return to the forefront. Even if you are bearish about the big picture, there should continue to be standout stocks, like Apple (AAPL), that are performing operationally at a much higher level.

The trading continues to be very slow and I'm working hard on stock-picking with trades in names like Sarepta (SRPT) and Smith & Wesson (SWHC) but it is shaping up to be a day of digestion, and that isn't all bad.

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