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Worried? It's Time to Buy the Stocks You've Always Wanted


Once we get past the current dementia in Washington, DC, the stock markets in the US and abroad will be looking at economic improvement around the world.

The US government has shut down, thereby giving the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) the certainty that they were waiting for -- open or closed, the markets just want certainty. That said, there are still other pockets of uncertainty that will likely be upon us by next week if the debt ceiling isn't raised comfortably before the October 17 deadline.

We find ourselves at one of those moments where the failure to remove a worry from the Wall -- in this case, the debt ceiling -- would be extraordinarily damaging to the markets and historically significant to the global financial leader, the United States. America has never defaulted on its debt and doing so would change the course of US history. It would affect the country's future. How is hard to know, but not in a positive way -- not by a long shot.

On the flipside, once we get past the current dementia in Washington, DC, the stock markets in the US and abroad will be looking at economic improvement around the world. So if you need a little tune to help maintain your sanity during these insane times, I suggest "Gray skies are gonna clear up, put on a happy face..."

The skies will clear up; the timing is the real question. My advice: Use this period of unease to find some companies you want to own. The opportunity may come to pick them up at good prices sooner than later.

Here's a quick look at the worries facing stock market investors. Click on the image below for an interactive version of this week's Wall of Worry, or scroll down for the text-only version and an explanation of how the Wall of Worry can be used as an investing tool.

QE: One certainty: This won't shut down even if the rest of the government in the US does.

UNEMPLOYMENT: Poof! All gone as the US government shutdown may delay when we get the report due for Friday. Also may be released early, so be ready.

US ECONOMY: PMIs getting stronger, but can they get America over the +2% GDP hump?

INVESTOR SENTIMENT: Will the latest government shenanigans reverse 38 straight weeks of equity market inflows? We're about to find out.

HOUSING CRISIS: Renting is becoming the new owning. Owning is becoming the new landlording.

EUROPEAN ECONOMY: "I'm coming out, I want the world to know, got to let it show..."

VOLATILITY: "Government debacles are a vol's best friend..."

Lloyd: You worried about the government shutdown?
HAL: Nope.
Lloyd: Worried about the continuing resolution?
HAL: Nope.
Lloyd: The debt ceiling?
HAL: Nope.
Lloyd: You worried about anything?
HAL: Yup. That market volume stays low.
Lloyd: Stay worried, my friend. Stay worried.

CHINA: Recent PMI (Purchasing Manager Index) reading just a hair above the critical 50.0 level. Sure would like to know the margin of error on this number.

GLOBAL ECONOMY: We may be only twenty feet off the ground at Kitty Hawk, but it beats being on the ground.

CONTINUING RESOLUTION: Sandwiched between the government shutdown and the debt ceiling, but likely to soon say, "Mr. DeMille, I'm ready for my close-up."

BONDS: We don't need no stinking taper!

CENTRAL BANKS: India's RBI (Reserve Bank of India) raises interest rates to fight off inflation and to stabilize their currency... and to confuse everyone that much more.

MORTGAGES: Tough to get one in China these days. Not sure what that means, but I am sure that it concerns me a bit.

FRANCE: President Hollande rethinking that 75% tax rate for upper income earners. Better hurry up as there likely aren't many left that still live in France.

CONSUMER CONFIDENCE: Only thing the US consumer is confident of is that Washington, DC, politicking will continue to erode our confidence.

SPAIN: Has put in a reservation for a large table at the LTRO (long-term refinancing operation) bistro in case head chef Mario Draghi decides to open it up again.

RETAIL SPENDING: In search of a new American pastime, as clearly malling has lost its charm.

DEBT CEILING: If it isn't raised, it will fall... on all of us.

SYRIA: Still a nasty, unpredictable civil war going on here, folks.

EMERGING MARKETS: Counting on developed world leadership and growth to get them through their current rough spot. Perhaps they should consider a Plan B.

US GOVERNMENT SHUTDOWN: Of course "essential personnel" will continue to get paid. These being the same "essential personnel" that shut down the US government, that is.

FED CHAIR: Still accepting resumes.

ITALY: Not to be outdone by Washington, DC, USA, they put their own European spin on politically-inspired government dysfunction.

What Is Lloyd's Wall of Worry?

by Lloyd Khaner

Welcome to my at-a-glance guide to the issues facing investors this week -- a unique tool for traders and money managers.

Typically the term "wall of worry" refers to the entire body of concerns influencing stock market action. When the wall is high, meaning the market is nervous, stocks tend to get cheaper.

This wall of worry is even more specific. Every week I list the exact concerns in the marketplace and use the list to help me make buying and selling decisions. As I like to say, "Buy fear, sell cheer."

In other words, once the the wall rises above 15 blocks, start looking for deals. If the worry count sinks below 10, consider selling; prices have likely peaked.
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LK/KCLP Ownership Disclosure: SPY, DIA, QQQ, GLD, TBF.
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