Personal Finance Advice

While the stock market is going through a rough period at the moment, it should still make up the bulk of your investment portfolio.  Despite the current love affair some analysts have for commodities, that market should only be used as an inflation hedge and not as the backbone of a sound investment strategy.

So what if commodities are riding high while the stock market has fallen from grace.  Does that mean you should reallocate your portfolio?  Let me put it to you this way, when has it ever been a smart idea to buy high, sell low?  I hate to say this, but if you didn’t already have some of your funds invested in commodities as an inflation hedge, you probably missed that boat already.

Panic selling can be one of the worst things you could do in the current economic situation.  If anything, shrewd investors will be looking out for potential bargains in the stock market that could be the springboard for hefty gains when the economy recovers.

While no stock is recession proof, some do better than others when a downturn comes along.  I have long been a fan of tech stocks due to the high global demand for such products.  Large cap stocks also tend to weather an economic downturn better than small cap stocks.  For investors like retirees who need to live off their investment income, stocks that offer strong dividends could also be a smart alternative.

Smart investors that have a well diversified portfolio with proper asset allocation should just stay the course as they should already be well equipped to ride through the storm.