Trading Boring Stocks
I think just about everyone would agree the markets have been chaotic since the start of summer.
Here’s the S&P 500:
Talk about whiplash.
We’ve seen serious momentum in both directions which is always the toughest type of market to trade.
But you wouldn’t know how crazy this market has been if you were looking at some of the more “boring” stocks out there…
Take a peak at Walmart (WMT) over the same time frame:
Or Phillip Morris (PM):
Or Southern Company (SO):
Or the king of boring assets, Gold (GC1):
Now, the cool thing about these “boring” assets is that they’re not hedges.
In other words, they don’t start going down automatically just because the market is going up. You don’t have to time up pullbacks and switch to these assets…
You can just slowly migrate some of your holdings to “boring” assets like these when things get dicey. If the overall market is bullish, they can still go up.
If it’s panicky and back and forth, these types of trades typically do extremely well.
If you know me, you know I don’t try to time up bearish plays — hardly ever anyway.
But I do love the idea of “hybrid hedges”… these are assets you can use that are still net bullish over time (like the broad market) but give you some extra upside when things are shaky.
Consider focusing on these until we’re at all time highs or breaking the August lows in the broad market. I think they’ll do well.
— Nate Tucci
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