VIDEO: Protect Your Profits Amid Volatility
There are two letters in the alphabet getting a lot of attention lately: capital “I” and capital “R.”
“I” as in inflation and “R” as in recession — two big concerns for investors right now, as economists debate how to interpret different signals of the state of the U.S. economy.
At its meeting this week, the Federal Reserve passed a .50% interest rate hike — the second hike in nearly two months and the first 50-basis-point (bp) to hit the markets since 2000.
And traders are already pricing in four more hikes throughout the rest of the year.
On top of that, starting next month, the central bank will start to shrink its $9 trillion asset portfolio.
Why all this back-to-back action by the Fed? Because of capital “I.” Inflation has soared to 8.5%, a 41-year high. (We’ll get the next inflation report May 11.)
There’s another issue to contend with: In late March, the yield curve inverted — meaning bond-buyers decided that longer-term risks to economic growth were increasing relative to shorter-term ones.
It’s significant because an inverted yield curve has historically preceded an economic slowdown, and dare I say it …. recession.
Income expert and dividend analyst Mike Larson, editor of Safe Money Report, has been preparing members of his service for months about the trends that we’re seeing now, and showing them how to preserve capital while creating more of it with defensive stocks.
Right now, members are sitting on open gains of 37.4%, 24.4% and 9.6%.
While Mike calls this investing climate “a tricky environment,” it’s his specialty:
When you’re facing a more hostile Federal Reserve that is hiking rates, versus cutting them, or keeping them flat — where that raises concerns about economic growth over the next year — you want to be in the more defensive names.
You want to be in the more resilient companies that can still generate revenue and earnings, even in a lackluster or down economy.
You want to be in those companies that offer a good yield, that have some volatility-protection built into them.
Mike believes that with no peace talks on the horizon to end the brutal war in Ukraine, “upward pressure on inflation” will continue — especially on the exports that are typically dominant from that part of the world, like fertilizer and wheat.
And with embargoes in place on Russian oil, you can expect higher gas prices for some time.
In today’s special four-minute video segment, Mike breaks down the dynamics creating volatility in the markets. He explains how the Fed’s shift in monetary policy will affect investments now and into early 2023.
Mike says “safe money” strategies are more critical than ever, and so is investing in the right sectors:
In parts of the technology space, you’re seeing “Dot-Com”-like losses for some stocks.
That’s something you need to be avoiding and you need to be investing in other sectors that give you stability, that give you yield and that give you safety.
That margin of safety is so much more important in an environment like this, than you might’ve had pre-pandemic, or even in the raging bull market we had in 2021.
In this insightful video, Mike discusses:
- A company close to “breaking out to multi-year highs.”
- A stock that’s a “good bargain” in a thriving sector.
- An industry in “a bull market since the second half of 2018.”
- Where to find “purchasing power protection.”
- When a recession could become a reality.
The information in this short segment couldn’t be timelier.
Just go to the video box above to watch it now.
Financial News Anchor
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