The stock market has made wild swings in the past couple of weeks and one does not know if that is the new normal for the next couple of month but at some point the market should stabilize. What do you do? Being patient and waiting in cash is a good idea. Another idea is to ensure you do your homework and as prices fall and you can buy very good companies with high dividends and you are 99% positive the dividends are safe, you can buy those companies.
Companies such as Goldman Sachs send to their clients, but the lists become publicly available to everyone. In an article by David Berman of the Globe; he wrote David Kostin, a strategist identified 26 stocks to get you through the downturn. No one really knows how long the economy will be in a slowdown, but there continues to be economic activity. People will be receiving income from the government, however by all expectations there is a downturn in the economic growth of the country.
Mr, Kostin’s pick are the big, liquid market caps – they average $33 billion based on the stock market. The second characteristic is they have good balance sheets. With an economic downturn cash flow will be less, having reserves and access to lines of credit and the Treasury are very good things.
The stocks are Health Care – the virus is a health concern – Alexion Pharma; Align Technology; Gilead Sciences; Bristol-Meyers Squibb; Illumina Inc; Biogen Inc; Quest Diagnostics; McKesson Corp
Information Technology – Intel; Analog Devices; Texas Instuments; Qualcomm Inc; Maxim Integrated Products; Salesforce.com; Xilinx Inc; Cognizant Technology Solutions; Skyworks Solutions
Communication Services – Take-Two Interactive Software; Electronic Arts
Financials – T Rowe Price Group
Consumer discretionary – Lowe’s; Best Buy; Walgreens Boots Alliance; Booking Holdings
Consumer Staples – Altria
Industrials – UPS
Linking to dividend paying stocks, having cash is wonderful, you do not lose money. However companies that pay dividends means you will make more than doing nothing. The key is having a long term horizon and buying very good companies at lower than normal prices. You may or may not have heard all the companies on the list, that allows you to pick some and follow them which is doing your homework. When the markets go down, that is great opportunity to nibble, when the markets go up you wait. Capital gains come and dividends flow – that is a good thing for those with patience.
There are more questions than answers, till the next time – to raising questions.