General Stock Investment Strategies/RE:
Thank you Todd again for all your help! One final question..aside from Bond funds are there any sectors you feel may not react along with the S&P if there were a major correction? I have a little money in a real estate mutual fund and an REIT as well as an energy index. I would say im pretty diversified now but curious on your input.
You know, I've seen things happen that defy the odds. You think something would be the logical alternative and then you realize that there's a twist that no one was thinking about and sure enough, what you thought would be safe is not safe. I wish I could give you some sound input on this but sure as I do, there could be a twist that makes everything null and void.
I can tell you, that most everyone uses utilities everyday. And most everyone will use energy everyday. I think utilities are possibly more safe during a downturn than other sectors.
One thing you can do to research this is go to a large mutual fund company website that deals in sector and industry exclusive mutual funds. Then take a historical look. In example, look at a mutual fund that deals only in utilities or more exclusively only in electricity or water, etc. Get a chart of it and see how it performed over the last few corrections, crash, etc. If it held up then that might be something to weigh in when making your decision on where to put your money, whether it be a fund or an individual stock. History is your friend for learning, but don't trust it blindly. There may be certain factors back in history that made things work out great for investors back then that may not be as applicable today. For example, coal was used to power most of our electrical needs in the past. But during the present Obama administration coal is a bad word. Keep your eyes open and remember the context in which things happen. I wish I could do this 100% of the time, but heck we are all just imperfect humans. We are fallible.
As for real estate, it is pretty stable except for during the last housing bust and then also back in the 70's as I recall. Housing has not really come back that much relative to where the long term trend used to be. I think the next generation is not as concerned with ownership of homes as they are in other things for now.
As for bonds, I don't deal in them. Many in my paternal family like them a lot. I just like stocks better.