Even, during the best times, the stock market, often confuses, and scares, certain people! Thus, it should be no surprise, than, during these times, when, after, about a decade of an, ever – rising stock market, we have witnessed, near – record – breaking, fluctuations, on a daily basis, in both a positive and negative direction! Many have, in the past month, or so, witnessed the asset value/ market – value, of their portfolios, drop dramatically! Since, it is generally, unwise, to over – react, to what occurs, in one trading day, or shorter – period, it makes sense, to pay keen attention, to what is causing this, and why! Before the onset of the current pandemic, many experts, predicted a recession, either this year, or next. One reason, is recessions, occur, periodically, but another reason, is, the appearance of our economy, and thus, its impact on the stock exchange, have been, somewhat, propped – up, by the huge amounts of monies, pumped – in, by the Federal Government, by a combination of trillion dollar, deficits, as well as artificially, low – interest rates. Many, wonder, these days, how, they should invest, for what, is, probably, coming up, in this regard. With that in mind, this article will attempt to, briefly, consider, examine, review,. and discuss, 5 possible types/ categories, to prioritize.
1. Defensive stocks: Stocks, which, generally, fluctuate less, because, their industries, are considered, necessities, and are more predictable, are often, called, defensive stocks. In most cases, companies, known as utilities, which, includes electric, and gas companies, fit this niche. These types, generally, pay consistent, reliable dividends, and, undergo, far less fluctuation!
2. Niche – focused: Think about what, might be, considered, essential, in the near, to, intermediate – term! What specific niche industries, might become, more, in – demand. For example, based on, what has occurred, we might consider, corporations, who focus on, laboratory testing, medical research, medical/ scientific equipment/ supplies, etc, might perform, better than most others.
3. Balanced: There is no such thing, as a Crystal Ball, when it comes to investing, and investment strategies! For this reason, it might make sense, to create, a balanced, well – considered, portfolio, which emphasizes financial fundamentals, rather than, merely, market – timing, speculation, etc!
4. Value – based: We often hear about Value Investing, but, in uncertain times, real value, becomes even more relevant. Consider companies, which have quality basics/ fundamentals, meaning, whose price, went down, more because of overall trends, than their own weaknesses!
5. Asset Management Mutual Fund: One strategy to consider, in order to let investment professionals, better guide you, is to invest in, Asset Management mutual funds, with historical consistency, in both, rising, and falling, markets!