If traders bought out of a few of their fairness allocation, many of the inventory market is on sale now, which means that costs are down 10%, 20%, even 50% from earlier within the yr. Now stands out as the time to deploy a few of that money again into areas of the inventory market which have gotten overly discounted. Excessive-quality firms, worth firms and firms with sizable dividends can all make sense on this market surroundings and are typically much less unstable than extra growth-oriented firms.
One other place to look is different investments, which might have very low correlations to inventory and bond markets. Absolute return funds, merger arbitrage funds, and personal fairness and credit score are all areas with a lot decrease correlations to conventional inventory and bond markets however can present added sources of return.
Timing the market is almost not possible, and ready for the markets to look or really feel protected will most likely lead to lacking a market rebound. It’s OK to shift allocations or rebalance portfolios as market situations warrant. However traditionally, the very best course has been to stay to your funding plan in good occasions and unhealthy, and ensure your portfolio is aligned along with your long-term targets.
Tim Clift is chief funding strategist of Envestnet Inc. (NYSE: ENV)