Bloomberg ran a story today on why there was broad sell off in equities today. It cited the middle east unrest as the main cause for the increase in oil prices. Despite the increase in oil prices, the oil company's stocks fared poorly with many of them declining today. The declining stocks included some energy stocks ( e.g: COP and PTR ), broad technology sector, utilities and the emerging market segment.
The emerging markets weren't helped by a decline in Israeli market, a decline in overseas market and the terrorist attacks in India.
Despite the large increase in energy prices, people have got used to the higher prices at the gas pump and in the grocery store. The increase in interest rates is unlikely to quell inflation as the increase in gas prices is the primary cause for increased prices around the world for all sorts of services. Although the demand for gasoline is constant in U.S year over year, the world wide demand is unlikely to flatten.
Eventually, the companies will pass the cost to the consumers and the earnings and stock prices will recover. Steep drops in stock prices will not be sustained over longer periods of time. These are good times to invest in the emerging markets ( when declines are steep ) and in the U.S markets. The U.S large cap segment is becoming more attractive with good, solid exposure to international markets. Significant downturns provide market players with many opportunties to invest and buy into good stocks at attractive prices. The important thing is to have enough cash to invest when the opportunity beckons.