The summer is here and the market is enjoying a surprising relief rally amidst a global health pandemic. But that doesn’t mean investors should get complacent. In fact, it’s the perfect time to re-educate yourself on some principles of investing ahead of the fall.
“Make sure that you do the things like re-balancing and looking at your overall portfolio construction,” said State Street Global Advisors Deputy Global CIO Lori Heinel on Yahoo Finance’s The First Trade. “So those who re-balanced back into equities were able to capitalize on that rebound whereas those that did not certainly were not.”
What Heinel is referencing is the powerful rally in markets since the late March lows that indeed has made a lot of folks richer, provided they re-balanced their portfolios and avoided the predictions of various doomsayers. The S&P 500 (GSPC) and Nasdaq Composite (IXIC) have charged ahead by 25% and 30%, respectively, from the lows amid a rotation into big cap tech stocks such as Microsoft (MSFT) and Apple (AAPL) that were unfairly sold off earlier in the pandemic hysteria.
Heinel told Yahoo Finance she has done some re-balancing of late, taking profits on winning positions.
As for Heinel’s other summer investing tips, the message is clear: Don’t get too bogged down by holding hot stocks in areas like work-from-home technologies (we see you, Zoom (ZM) shareholders). Stay diversified (especially ahead of the presidential election…), and respect fundamental investing.
“Another important part is diversification. Having small positions in things like gold and cash has been very, very helpful,” Heinel said. “The last thing I would say is that you still have to focus on the fundamentals. While it’s difficult in this kind of environment to see what the next quarter or two quarters from now are going to look like, if you look a little bit longer term and get rid of some of the noise, your chances of being positioned properly are going to be better.”
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