I have to admit, there is a lot for investors to be worried about right now as far as the stock market is concerned, at least from the perspective of a conservative, fundamental investor with a long-term focus.
Equities are generating massive valuation multiples to a degree we only see before downturns, making this a nerve-wracking tie for many investors who, on the one hand, don’t want to miss out on the upside the markets have consistently shown, but on the other hand, don’t want to be left holding the bag when everything does implode, which it eventually will.
To combat these feelings of angst, I would encourage investors to start bolstering their portfolio with defensive names in sectors which should perform well in down times.
I prefer sectors like fast food, with Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR), sectors with guaranteed income streams like regulated utilities and pipeline companies and precious metals producers - particularly gold, with some silver exposure as well.
The extent to which an investor chooses to go on defense really depends on that particular investor’s risk tolerance level and views of the market over the near-term (optimistic vs. pessimistic).
Personally, I think now is the right time to load up on many of the defensive names out there right now. Most of the specific sectors I identified above are generally out of favour with investors, as these are the definition of “boring” when investors are demanding “sexy” for their portfolios.
As Warren Buffett has said, “be greedy when others are fearful, and fearful when others are greedy.”
Invest wisely, my friends.
