Time To Tighten Up!

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Mr_OVBE

Tags - #stocks #investing #investing strategies
- Last updated February 1, 2023

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The September 21, 2022 Federal Reserve rate increase PSA means it is time to tighten up. I do not like to call tops or bottoms, but the stock market is still trying to find a bottom. Still trying to find a bottom on top of an ongoing war, and no catalyst in the next 30 days, makes me believe there is more downward pressure on the way. So is the sideline the best play, buying the dip after the dip, accumulating growth stocks that are down significantly, buying utility stocks and dividend aristocrates, or stocking up on Treasury bills, notes, and bonds?

Decisions made now will positively or negatively change investors lives in a major way five years from now. There is not much room for error and investors will either be right or wrong. So what is the next move?

My perspective is defensive and as economies tighten up globally, so will I. With Christmas being the exception, I believe consumers will spend less on things they do not need for the next few months. New mobile phones and gadgets are nice, but people need shelter, food, electricity, and gas to survive.

Considering the basic needs of the consumer, I believe utility ETFs such as the Fidelity MSCI Utilities Index ETF (FUTY), Vanguard Utilities Index Fund (VPU), and the Utilities Selector Sector SPDR Fund (XLU) are good defensive investments. Outside of the utility sector, companies such as Coca-Cola (KO), Pepsico, Inc. (PEP), and Hormel Foods Corporation (HRL) are great money shelters. Those investments pay dividends and the stock price will appreciate once the recovery starts.

The goal is to invest in companies that pay investors to hold their stocks, but also have little risk of going out of business because they provide things consumers cannot live without, or need the offered products/services to make it through everyday life. Investing in similar ETFs or dividend stocks will allow your investment to grow even if you never bought another share. As with every investment, do your own research and invest in companies that fit your investment strategy. Invest Wisely!