HAUKE: As a rule, market doesn’t reflect today’s bad news

Health care, schmealth care, the market is going higher. Debt, schmedt,
the market is going higher.

Taxes, schmaxes, the market is going higher. I realize I might be waffling a little here, but I think the market is going
higher!

Until a bull market reaches its last stages (the final three to 12 months), there is a general lack of belief that the market
can go higher. The media picks up on bad news (and higher taxes or record debt levels really is bad news), but then makes
a mistake when suggesting the bad news is going to bring the market down. These events may bring the market down temporarily,
but then the strength of the bull market reasserts itself and the market keeps going up. You tend to see the opposite during
the last stage of a bull market, with the media and investors around the world using any and every reason to believe the market
will keep going up.

We saw this in early February when the Greek debt situation was making headlines for two weeks. The fact that Greece is practically
insolvent is a bad thing and it is unfortunate for the Greek people. But it means nothing at this stage of the bull market
even though experts and the media use it as a reason to tell us to get out of stocks. The market did fall about 10 percent
as the stories about the situation gained momentum.

I was very vocal about my opinion that investors should have put money to work six weeks ago (you can see a Fox Business
News appearance I did Feb. 5 in which I suggest the buying at www.youtube.com/keenanhauke). I received a lot of pushback from
people about that opinion. Today, the market is at a new rally high and anyone who did some buying back then has been rewarded.

Just before the health care bill passed, I read and heard a lot of people saying that, if it did pass, the market would tank.
The bill passed, and the market is actually up a little. There are some items in the bill, such as higher taxes, that are
flat-out bad, but since the market doesn’t care about that today, we shouldn’t, either, when it comes to our investments.
The same goes for the ridiculously high debt levels world governments are living under today. Right now, the market does not
care about debt, and you shouldn’t until the market changes its mind.

The market has revealed an interesting tell over the last few months. Emerging markets were one of the best gainers in the
last bull market from 2003 to 2007, and they did quite well for the first six months after the March 2009 low. I think most
investors will tell you they want exposure to places like China because they believe the growth story there will never end.
Perhaps, but the market is looking at a different chapter to that story today.

China has been lagging the U.S. market since last July and 2010 has been downright painful. Brazil and many other emerging
markets began falling behind the United States at different points in the fall, and I think the message is clear: Investors
should favor U.S. equities over any other part of the world for the intermediate term.

A quick comment about current conditions. The rally from the February low has been strong, but it is slightly overdone in
the short term. The most probable outcome for the next few weeks is a period of correction or consolidation, but I am not
expecting a serious pullback from here. I would use any weakness as a buying opportunity with my focus remaining on U.S. stocks,
small caps and consumer staples in particular.

Also, I started a weekly blog on my Web site at www.samexcapital.com.•

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Hauke is the CEO of Samex Capital Advisors, a locally based money manager. His column appears every other week. Views
expressed here are the writer’s. Hauke can be reached at 203-3365 or at keenan@samexcapital.com.