5 Ways to Find Your Footing in a Shaky Market

Timing is everything. 

For example, if you bought the SPDR S&P 500 ETF Trust (NYSE: SPY) at the beginning of the year, you’re probably happy with your 17% open gain. 

But if you bought SPY three months ago … you’re probably not thrilled because it’s been trading flat since. 

The same is likely true if you bought red-hot technology stocks like Facebook (Nasdaq: FB) or Amazon.com (Nasdaq: AMZN). Those who bought closer to the beginning of the year should easily be sitting on a double-digit gain.

But if you bought those tech stocks three months ago … you might wish you’d arrived earlier to the party. If you invested more recently, you’re sitting on high single- to double-digit losses.

What happened? 

In September, the S&P 500 suffered its worst month since the coronavirus crash of March 2020.

Maybe you got the timing right on tech and the indexes where they are heavily represented. I hope you did. It’s hard to watch early gains get wiped out, and for no good reason. 

Small Caps Didn’t Fare Much Better

In the first two months of 2021, most stocks rallied together. Breadth was strong. But when small-cap companies stopped climbing, large-cap companies — like those in the S&P 500 — didn’t.

Just look at this updated chart showing the relative performance of the SPY and the iShares Russell 2000 ETF (NYSE: IWM, Rated “C”) from March onward. 

While the SPY is still UP by double digits during that time frame, the IWM is actually DOWN almost 2%.

So what’s going on? 

I’ll Tell You What Didn’t Happen

The Federal Reserve never stopped pumping epic amounts of money into the markets to support them after the depths of the COVID-19 crisis. 

Now, however, there’s talk of tapering that support and, eventually, raising interest rates. Fears about both contributed to that September swoon in stocks.

Why? Because investors are concerned about whether money will start getting more expensive and harder to come by.

It’s funny how people get scared when economic data comes in fairly robust and indicates a broad-based recovery. 

But perhaps they worried too soon … or, at least, about the wrong things.

Last week’s lousy employment report showed the economy created just 194,000 jobs in September … well short of the half-million jobs economists projected.

What we can be sure of is that we’ve entered a more challenging period for markets. 

Volatility is on the rise. Stocks are wavering. Gains are getting harder to come by.  

But just because gains are harder to come by, doesn’t mean there aren’t plenty of opportunities out there to come by them. The Weiss Ratings, and the services we design around them, are here to help you do just that.

One thing I can say with utmost confidence is that “Safe Money” investing strategies like these have proven to work in just about every kind of market: 

•  Keeping a reserve of cash;

•  Targeting assets other than stocks;

•  Taking profits in shorter-term positions, and letting your long-term winners ride for potentially bigger gains; and

•  Investing in stocks with built-in advantages (i.e., solid free cash flow, regular and growing dividend payouts, solid management teams, etc.).

There’s one more strategy I want to make sure you are aware of …

If you don’t already use the Weiss Ratings in your investment search process, there’s no better time to start. Our proprietary ratings are designed to help investors like you to put your money in some of the safest segments of the market. 

In fact, I just recommended that my subscribers buy two high-rated stocks for this higher-volatility market. They are set to go up, rain or shine, without keeping anyone up at night. 

Get the full details on how our Weiss Ratings work — and how you can put them to work for you right away — here.

Until next time,

Mike Larson

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