Monday, November 14, 2016

Trading the Rotation

The market reaction to the election has been interesting.  Previously high flying stocks such as utilities, telecom, gold miners and REITs have been knocked down, with some getting close to 52 week lows.  Similarly, bonds have taken a big hit.   Previously beat up stocks such as financials, biotechs, and materials are rising, some by as much as 50% versus a couple weeks ago.  Energy stocks have been mixed, some have bounced and some are still down.

In the weeks leading up to the election, I was taking the opportunity to buy some beaten up stocks, that I already own.  Some of these have now rallied over 40%.   Since I don't think the Trump rally is sustainable, I plan, as a hedge,  to sell off some of the recent purchases for a profit, while keeping my core holdings.  That way if the market sells off, I will have locked in profits.  If the market continues to rise, my core holdings will benefit.

In addition, I will be looking to purchse stocks in higher dividend paying stocks that have been beaten down (and are now on sale :-) since the election:  REITs, utilities, telecoms, and consumer staples.  Despite the concern about rising interest rates, I still believe locking in 3-5% dividends is still a good strategy at this time.

For more on Strategies and Plans, check back Mondays for a new segment.

This is not financial advice. Please consult a professional advisor.

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