So people keep picking at me.
- “Hey Picky! Can you write an article about how to invest in these crazy times??”
- “Hey Mr. Picker! I want to be rich. What should I buy now?”
- “Picky, you’re an inspiration! Can I name my first born after you??” (I said it’s Mr. Picker to him, and yes he could)
The true answer is, I don’t know. Anyone that says they know full well the best option is either a sign of the second coming or a sign for me leaving. Now, that doesn’t mean I can’t lay out a few options for all of you and let you decide the best route for yourself.
Cash is not a terrible place to be for the short term. The largest short term runs and falls are in bear markets, and the market just had a 15% run in less than two weeks. If the market goes back down to the lows of the last month it wouldn’t be the worst thing in the world to start putting money into long term positions. The market would be down around 35% from it’s peak in February. Maybe put to work 10-20% of your cash in whatever option you like best.
However, with the current government policies in place cash is not a good long term thing to hold. Printing money on such a large scale can potentially have negative inflation ramifications. Look to start putting the money into assets in the next few months. What assets you might say?? Good question.
It’s hard to wrong with some good organic Blue Chip stocks. Some that come to mind: Johnson and Johnson (JNJ), McDonald’s (MCD), Coca-Cola (KO), etc.
However, I did say, “It’s hard to go wrong.” Meaning that over the long term you will do fine. You’ll get more stable returns, but the blue chip companies are so established that they will recover slower and with less tenacity than other companies. In addition, they haven’t been hit as hard and are not at massive discounts like other companies.
Types of people Blue Chips are good for:
- Close to retirees: Stable dividend income and less of a chance of a large loss.
- Type A Personalities: If you like control and knowing exactly what’s going on.. this is good for you.
- People Who Watch the Office: It’s a basic show. You don’t branch out and take risks on awesome TV shows. What makes you think you should do this with stocks?
Bonds in the current environment with such low yields can barely keep up with inflation. Heck, they’re even lower in a lot of cases. Probably not your best for the long term.
Plus, being able to fling around with whatever stock you want is so much cooler. Match Group (MTCH) comes to mind…
The Hardest Hit
The way you’re really going to kill it in the next years is looking for the companies that have been absolutely obliterated. Pretty much all of energy. A large portion of consumer discretionary that have any physical locations. Ulta Beauty (ULTA) comes to mind. They’ve lost around 50% in the past month. In the end though, women will still want beauty products after this is all over, right? You’ll double your money if they go back up to what they were at before Corona. It’s risky and you have to look at their balance sheet, but it’s far more likely than Coca-Cola doubling in size after this ordeal.
Make sure to pick ones that financially are okay and will make it through without a great deal of struggle! If you pick one that is already stressed with their balance sheet, then you might not like the long term effects. Companies off the top of my head like this.. Five Below (FIVE), Ulta Beauty (ULTA), Valero (VLO), Ross Stores (ROST), TransDigm Group (TDG).
Types of people who this applies to:
- Younger gents or ladies that have 10-30+ years till retirement
- People who don’t watch the Office
- Those willing to take on a higher amount of risk
- Anyone who has ever uttered the words, “Hold my beer”
I don’t own any of these securities and this post is not an endorsement to buy any of these securities. I do not have a position in any of the companies listed. Don’t sue me.