Stocks keep hitting new lows. Here’s how to protect your portfolio and generate some returns
[ad_1]
Market rally which began in March 2020 ended abruptly. Main Street investors and Wall Street traders alike have begun to shift towards a defensive strategy. On Friday, the S & P 500 briefly traded more than 20% below its record high , before closing flat thanks to a late-day rally. Some market analysts will consider this a bear market. Others won’t call the market until it closes below that point. The selling seems to be relentless, regardless of whether it’s an official bear market. We joke that it is a bear market when people sell their stocks. But bear markets are where everyone sells their stocks. Frank Gretz, Wellington Shields’s CEO, stated in a Friday note that the last week was similar to Wednesday. Although it can be challenging to find huge winners in such times, there are ways to minimize your losses and possibly make some gains. Receipt sectors Recession markets Bear markets can often be accompanied by economic recessions, which is why Wall Street professionals and economists are becoming more concerned about the possibility that the U.S. may soon follow that path. Goldman Sachs chief U.S. equity strategist David Kostin warned this week that a recession would likely mean a significantly deeper pullback to the S & P 500, possibly to around 3,360 . Although experts expect a recession to occur in 2023 according to many, it is possible that the market has already begun pricing this possibility. Goldman states that the sectors with higher performance in recessions are utilities, energy, health care, and consumer staples. Kostin said that the leadership of these sectors decreases once they are in recession. There is still a possibility that the U.S. will not enter recession but there may be continued high inflation. According to Bank of America, materials and energy stocks may be able to extend their time among the top performers. The theme of fortress stocks is stocks with strong quality ratings in defensive sector sectors. Healthy dividend yields also emerge. Investors tend to gravitate toward regular payments in times of high inflation and volatile stock prices. CNBC Pro sought stocks with high dividend yields and that had exhibited resilience in bear markets. This list contains Clorox, Campbell Soup and a Gilead Sciences health care company. ETFs with outperformed in this year’s market also show the advantages of income stocks. The Invesco S & P 500 High Dividend Low Volatility ETF (SPHD) , for example, is slightly positive year to date. Kraft Heinz, Verizon and energy companies such as Chevron are some of the top holdings. Names that are cheap Given the extent of the sale-off, it is possible for companies to have valuations that fall below sustainable levels, even in times of economic slowdown. CNBC Pro looked for stocks in the S & P 500 that are trading well below their average price-to-earnings levels , including big names likes Disney and Advanced Micro Devices . Wall Street analysts now support some tech stocks even though they have seen big drawsdowns. Wedbush’s Dan Ives, a Wedbush analyst wrote Friday that Apple was “a compelling name to hold and ride the market storm” and that any slowdown in China by the smartphone maker wouldn’t be nearly as severe as people fear. JPMorgan’s Mark Murphy, meanwhile, wrote that Salesforce is too affordable to be passed up despite some indications that enterprise-software could experience slowing growth.
[ad_2]