It’s time to get defensive, folks.
Actually, several weeks ago was the right time to get defensive. That is, before the turmoil in Greece and China reared its ugly head and punished long-only investors.
Stock markets are down sharply over the last two weeks. China’s market has fallen 30%, and even after a number of last-ditch efforts to prop up shares prices, it’s still dropping – down another 5.9% today!
Even U.S. investors are starting to freak out!
Like I said on Monday, the markets are having a full blown psychotic break as investors are trying to make sense of things. So now’s the time to play it safe.
Not only will a defensive strategy save you from excessive losses… it can hand you a profit as well!
Back at the end of April I recommended switching to a defensive stance to ride through the summer, focusing on the consumer staples and health care sectors.
Throughout May and June, these defensive sectors climbed from the bottom of Cycle 9 Alert’s Leaders & Laggards Board – which ranks the sectors I find the most and least attractive – up to the top. Overall, those sectors have held their ground while the more aggressive sectors have fallen around 3.5%.
Obviously investors are freaking out right now. But emotional investing is never wise investing.
Fortunately, my sector-based strategy in Cycle 9 Alert alerted me to the shift toward defensive sectors well in advance of the recent market carnage. And that allowed me to position Cycle 9 subscribers in two defensive plays with great profit potential.
Adam O’Dell, CMT
Chief Investment Strategist, Dent Research