Armageddon - Or Just An Overdue Correction

Forget their soothing sayings and soothsayings. Inflation is the inevitable result of spending like a band of drunken sailors on shore leave. The gulf between their words and our experience is why we can expect more choppy markets. You know, like they have always been.

What to do now?

Chicken Little panic is not the answer. I suggest instead:

(1) Stop obsessing about the "big numbers." Look at the percentage rise or decline in your portfolio instead. And look at the indexes, which you most likely do not own in their entirety anyway, with the same coolheaded gaze. So it's down 1.7%, or up 1.7%, or unchanged. It's no reason to either throw in the towel on a single down day or rush to buy more FOMO junk on a day you fear you might be missing something.

(2) Recognize sector rotation as probably the most important single key to stock market success. We have enjoyed a delightful - and unusual - period of such low inflation that any companies that may have no or low earnings today, but the promise of massive earnings in a year (a little something we call "growth stocks,") have been big winners.

Will growth as an investing medium continue to be the best choice in a more normal inflationary environment? I don't know, you don't know, and the Man in the Moon does not know. However, as a really long-time student of market history, I made the decision this year to begin to lighten up on tech and many other growth areas and slowly move more funds into energy - both traditional and up-and-comin' - materials, industrials, and real estate.

I still maintain a diversified portfolio, with "some" representation in nearly every sector and, lately, an increasing position in the Defensive and Income portion of my personal as well as our Investor's Edge portfolios. There always will be the occasional special outlier within an out-of-favor sector or industry - and, of course, the occasional clinker in an otherwise-great sector or industry!

View single page >> |

Disclaimer: I do not know your personal financial situation, so this is not "personalized" investment advice. I encourage you to do your own due diligence on issues I discuss to see if they ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.