2022 has been a rough year thus far for stocks. The lingering effects of the Covid economy, the war in Ukraine, and rising inflation have all added to the stock market’s woes. The Federal Reserve is determined to tame inflation by bumping up interest rates to slow the economy down. Rising interest rates can hurt corporate earnings and make other types of investments more attractive than stocks.
The stock market will correct itself. While it seems a bit premature to go “all in” buying stocks, we are seeing some signs of the market internals improving a bit. The current strength in stocks is in the Utility sector. This sector is usually strong when things are a bit bumpy in the investment climate. We are seeing some real improvement in Industrial stocks and Information Technology stocks. These two major sectors are very broad in scope. Concentrating stock selection on strong companies with solid balance sheets is very important at this time. Now is not the time to be trying to pick the next Google or Amazon.
Water, Electric, and Gas Utility stocks may lack the pizzaz of Technology names. However, these companies often pay a steady dividend and can provide a stream of income and price stability during turbulent times. Most investors would not want a stock portfolio overly concentrated in Utility stocks. However, by allocating a percenatge of one’s stock portfolio to Utility stocks, turbulent market times can be made a bit less nerve-wracking.
Please call me if you would be interested in having Augusta Capital LLC manage your investment portfolio.
