When to Worry About Protecting Your Wealth (and When to Focus on Building it)

Mike Larson

Too many advisors, analysts, and pundits only talk about ways to build more wealth. They spend precious little time discussing how to protect the wealth you already have.

Me? I get paid to worry, and it’s a job I take very seriously. When I think markets are going to heck in a handbasket, I have zero problem shouting from the rooftops about it. The most prominent example was with mortgages and real estate in 2005-2007, and there are plenty of others.

But frankly, worrying hasn’t paid off for some time. Outside of a handful of risky sectors (like autos), the markets and the economy have looked pretty good and performed pretty well. That’s why I’ve spent all of 2017 (and part of 2016) urging you to stop worrying and start profiting!

Last month, for instance, I noted that select interest rate and other indicators were perking up and that this was a positive sign for future growth. I recommended you:

“Do some bottom-fishing in energy, boost your allocation to financials, and target ‘growthier’ high-yield investments rather than just ‘safe haven’ plays like utilities and consumer staples.”

Further back in May, we suffered a 372-point “Trump Dump” that led some to question the sustainability of the market rally. But I concluded that it wouldn’t matter all that much in the grand scheme of things. My reasoning:

“I’ve seen a lot of political crises come and go in the two decades I’ve been following the markets closely. They give the Washington press corps a lot to talk about, and they clearly can cause short-term chaos. But unless they derail the underlying economy, or crush corporate earnings, they usually don’t have a lasting impact.”

Of course, that followed other bullish comments I made in April. I said at the time that the “right kind” of stocks were leading the market, and that “as long as the market keeps serving them up, you’d do well to stay long my favorite stocks and sectors.”

Even in March when the Fed hiked interest rates, I said that wasn’t a signal to sell everything. Rather it was a sign to move money out of low-risk Treasuries and in to higher-yielding bonds. I also recommend you shift into higher-yielding, dividend-paying stocks that have “more leverage to an improving economy versus those that perform best in pre-recessionary environments.”

Or go further back to February and check out this article headlined “Fund flows tell me this rally may have LONG legs”. You’ll see that I warned investors not to get shaken out of stocks, adding:

“All the Negative Nellie talk has been replaced by expectations of accelerating economic growth, profit-boosting corporate tax cuts, spending increases on infrastructure and defense, and widespread regulatory rollbacks. Investors have a new growth thesis they can believe in, so they’re (finally) starting to shift money out of bonds and in to stocks.”

Heck, even before the year started, we concluded in this piece that the rally was “based on a solid foundation” and that “the recent breakout to new highs is occurring on heavy volume – the kind of technical confirmation you want to see if you’re a bull.” That followed another December article where we recommended using our Weiss Ratings to invest in everything from financials to industrials to materials to IT to consumer discretionary stocks.

All that is in the past, of course. So what about the future?

The Byrds will forever be remembered for that catchy 1965 tune “Turn! Turn! Turn!” – the one that says there’s a time for everything, whether reaping or sowing, loving or hating, and weeping or laughing. The same could be said for the markets. There are times to focus on protecting wealth and times to focus on building it.

I’ll keep monitoring the economy. I’ll keep watching the credit markets. And most importantly, I’ll keep following our Weiss Ratings data. That includes our proprietary Weiss Market Barometer … the critical BUY/SELL ratios we compute … and the momentum- and fundamental-based indicators we churn out each and every day.

If they tell me it’s time for you to pull in your horns, I’ll be sure to let you know. But I’m just not seeing it. So as far as I’m concerned, it’s steady as she goes … still! As always, you can get my favorite, specific investment recommendations in my High Yield Investing newsletter. If you aren’t signed up yet, you can give it a try by clicking here.

Until next time,

Mike

Mike Larson, Senior Analyst

ETF Spotlight Edition, by Mike Larson, Senior Analyst

Mike Larson is a Senior Analyst for Weiss Ratings. A graduate of Boston University, Mike Larson formerly worked at Bankrate.com and Bloomberg News, and is regularly featured on CNBC, CNN, Fox Business News and Bloomberg Television as well as many national radio programs. Due to the astonishing accuracy of his forecasts and warnings, Mike Larson is often quoted by the Washington Post, Chicago Tribune, As-sociated Press, Reuters, CNNMoney and many others.

About the Income & Dividend Analyst

In an era of high-risk exuberance, Mike Larson stands out as a leader in conservative investment strategies that outperform the market overall. Using the safety-oriented Weiss Ratings as a guide, he has a proven history of guiding investors to stocks and ETFs that provide asset protection, consistent dividends and excellent growth.

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