By John Persinos
Hi. This is John Persinos, editorial director of Investing Daily, with a video update for Tuesday, April 28.
As the world grapples with the COVID-19 crisis, now's an opportune time to review time-proven hedges, to simultaneously protect and build your wealth. In the following video, I explain these "defensive growth" strategies. For greater details, read my article below.
Generating growth with safety...
An exemplar of defensive growth is the utilities sector. Among the publications that I edit is our premium trading service Utility Forecaster. (My colleague Robert Rapier is the chief investment strategist.) Accordingly, I've provided ample analysis concerning the appeal of utilities stocks under current market conditions.
Read This Story: The Recession-Resistant Power of Utilities
Hedges also include precious metals, such as gold and silver. Gold provides shelter during crises and it's not too late to add some to your portfolio.
Gold has experienced a healthy run-up in prices over the past year. However, the rally in the Midas metal should continue during the coronavirus outbreak. I prefer gold mining stocks, which bestow greater potential for outsized gains than physical bullion or gold-linked funds. For details about a well-positioned gold mining play, click here now.
Every portfolio should hold gold. But don't forget about silver. The "white metal" is a crisis hedge that often and unfairly takes a back seat to gold. If you're concerned about stock market volatility, gold and silver warrant your attention.
Industrial demand plays a key role in silver's bullish story. Both gold and silver are used in several industrial processes and consumer products, but silver is far more prevalent and crucial.
Silver is found in computers, televisions, batteries, smartphones, calculators, cameras, conventional and electric vehicles, rockets, airplanes, watches, clocks, microwave ovens… the list goes on.
Consider additional safe havens, such as stable dividend-paying stocks. If a company has the low debt and healthy cash flow required to throw off juicy dividends, it follows that the balance sheet is intrinsically sound enough to sustain the firm through corrections.
Another timely hedge is agriculture. Fact is, the financial press tends to ignore agriculture, because it's not as splashy as, say, Silicon Valley companies, but it's an appealing sector now.
In today's uncertain conditions, providers of "essential services" are good bets for investors. And everybody needs to eat.
According to a recent United Nations report, the world must increase food production to meet demand by 50% by the year 2030, and by 80% by the year 2050.
Agricultural commodities enjoy powerful long-term tailwinds, due to political turmoil, agricultural destruction, population growth, and an expanding global middle class. As the following chart shows, the world will only get hungrier over time.
If you're risk averse and seek plays on agriculture that are safer than individual stocks, consider exchange-traded funds (ETFs).
Agricultural ETF portfolios invest in grain and feed products, oilseeds, cotton, corn, wheat, soybeans, cocoa, coffee, sugar, dairy, livestock, poultry, and/or horticultural products. These funds can invest directly in physical assets, the equities of major agri-businesses, or commodity linked futures contracts.
The health care sector looks appealing now as well. The major medical and drug providers typically enjoy strong cash flow, rock solid balance sheets, and long histories of earnings and revenue growth. They're essential services plays that are recession-resistant.
Read This Story: Can The Economy Get Back On Its Feet?
To ensure that you have a comfortable retirement, you need to find those investments that are poised to generate a steady stream of profits, not just for the next 12 months, but during the next 10-20 years. Turn to health services stocks for long-term wealth building and insulation from economic cycles.
A busy week ahead...
Make no mistake, the world economy already is mired in a recession. The only question is how severe it will get.
Corporate earnings reports will provide a major clue. We face a busy week of earnings results, with market-moving blue chips coming up to bat. Disappointing numbers from sector bellwethers, especially large-cap tech stocks, could tank the market. Many companies have simply withdrawn guidance.
About 20% of the S&P 500's market cap is concentrated into five huge tech companies, the highest concentration for the index since the dot-com bubble in the late 1990s, when tech concentration hovered at about 18%. That makes the stock market's rebound this month vulnerable.
When the books finally close on first-quarter earnings season, year-over-year profit growth is expected to come in at -10%. Stocks have risen in recent days, as a handful of U.S. states and countries partially reopen their economies. But investor optimism is probably premature.
Total global infections of COVID-19 rose to more than 3.05 million cases on Tuesday, according to data compiled by Johns Hopkins University. The death toll rose to 211,522. Evidence suggests that the number of infections and deaths are actually under-reported.
Joblessness has soared around the world and shuttered economies can't be restarted as if flipping a switch. Supply chains have been disrupted and shell-shocked consumers will remain wary into the foreseeable future.
That's why defensive growth plays make particular sense now. They may not rise as quickly as growth momentum stocks, but they don't fall as far when the market plunges.
Stay cautious but stay invested. Our team of experts at Investing Daily will guide you, every step of the way. Despite the mounting risks, there are plenty of ways to make profits in the stock market. The coronavirus pandemic is a crisis, but within every crisis you'll find the seeds of opportunity.
Comments or questions about crisis investing? Please email your correspondence to: mailbag@investingdaily.com
| What to Do Before Stocks Sink 57% | | | | A lot of people think the markets are in pretty good shape. But hold on a minute... according to Yale professor Robert Shiller, stocks are 57% too high. That's 14,000+ points on the Dow. Shiller won a Nobel Prize for his work on stock prices. And if he's right, millions of investors could be about to see their investment accounts crushed. Don't let that happen to you… especially when it's so easy to avoid. | | | | |
|
Tidak ada komentar:
Posting Komentar