ETF Watchlist: Week Of August 14, 2017

It took the threat of nuclear war, but we’ve finally got a legitimate source of uncertainty in the markets finally. Just a couple of weeks ago, most traders and investors were screaming “BUY, BUY, BUY!” at every turn. In last week’s watchlist, I urged caution saying that investors should view the current economic environment objectively and avoid chasing the returns of hot stocks or sectors. With an escalation in threats between the U.S. and North Korea, I’ve noticed some investors starting to panic and talk about moving everything to cash or gold or (gasp!) bitcoin. Just like piling into stocks at peak enthusiasm, selling all (or even a good chunk) of your risky assets at the first sign of trouble can produce equally damaging results.

If anything, an event such as this should be used to help you assess your true risk tolerance. If you’re a little jumpy at the first sign of trouble, a stock-heavy portfolio might not necessarily be for you. Minor tweaks to your portfolio are reasonable, but swinging from 100% stocks to 100% cash might be an overreaction.

Still, if you want to stay in equities but go about it in a risk-managed way, there are ways to do that. Normally, each week’s watchlist includes ETFs that I think could move in the upcoming week based on economic news, earnings or some other event. This week’s edition is going to look a little different. I’m going to highlight four funds that you can use to help manage overall portfolio volatility. If you’re worried about current world events and how they could impact the financial markets and your money, this week’s watchlist is for you!

Without further adieu...

SPDR Gold Trust ETF (GLD)

Gold (and to a lesser extent, silver and other precious metals) has always been viewed as the traditional hedge to equities. During uncertain times, people flock to safe places. Precious metals are viewed as an asset class that will always have value regardless of what happens economically or politically.

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Disclosure: None. 

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