Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” Now, we may not be climbing into the ring with a professional boxer anytime soon, but the financial markets we tangle with on a daily basis also have an uncanny ability to surprise, inflict pain, and otherwise ruin our best-laid plans. The stock market decline in late August is a perfect example. A wave of selling pressure culminated in a flash crash on August 24. Many traders and investors simply couldn’t withstand the pain and sold into the panic.
Once again, dividend stocks aren’t bond substitutes. Besides being properly diversified, your plan may also involve gradually reducing your fixed-income allocation and increasing your equity exposure during times of market stress. The question then becomes what stocks to buy. Corning Inc. (GLW), a specialty glass maker, and The Mosaic Company (MOS), which produces crop nutrients such as potash, are two prime examples.
Source: Wall Street Daily
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- All Investing Involves Risk
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