This Sector Belongs In Your Forever Portfolio

A change in market leadership is underway, as investors around the world freak out about the potential for rising interest rates. More specifically, you’ve probably seen countless headlines in recent weeks talking about the surge in financial and energy stocks at the expense of (gasp) my beloved tech stocks.

As these trends gain momentum, one reader asked if we should go “all-in” on energy and financials now.

My response? Not just “No,” but “Hell, no!” Here’s why…

Never Early, Always Late

Over the years, I’ve learned that following headlines often leads to heartache. Constantly trying to chase performance by moving your capital in and out of the top-performing and headline-grabbing sectors is a recipe for disaster.

Remember, the news cycle is notoriously short and late. Headlines reflect events in recent history (i.e., the past). And as we all know, past performance is no guarantee of future results.

In other words, if you’re relying on headlines to dictate portfolio moves, you’re always going to be late to the game, and you’re always going to be “paying up” to get positioned.

What’s worse, within a matter of days or weeks, you’re going to be tempted to move onto the next trend that’s attracting fresh headlines, and then you’ll pay up again. Does that mean we should ignore all burgeoning trends, including the ones taking place in the financial and energy sectors? Of course not!

Putting some money into financials and energy stocks right now makes perfect sense, as they’ll benefit during times of economic expansion. And as I’ve shared recently, there’s so much pent-up economic demand right now, we’re overdue for a major GDP surge.

Sure enough, economists at major investment banks this week started predicting GDP growth will hit 8% this year… eight freaking percent! Unless you live in China, a number that big hasn’t happened in decades. But again, don’t get caught up in all the excitement.

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