with your investments in the face of continued uncertainty surrounding the ongoing effects of the pandemic? The short answer is to remember that the stock market is forward-looking, and you should remain disciplined, diversified, and focused on quality and income. This logic applies pre-pandemic, postpandemic, and right now. 1. Stay Disciplined. When headlines are predicting challenging times ahead and/or stocks are selling off, people think they need to do something, anything. Stay disciplined in your approach and avoid the temptation to try to time the market. As famed investor, Peter Lynch, pointed out, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” 2. Be Diversified. A diversified portfolio that is spread across the different sectors that make up the stock market – technology, health care, industrials, utilities, to name a few – can help you navigate through different market environments. Another important aspect of diversification is not putting all your eggs in one or a few companies – a good rule of thumb is to have not more than 5% of your portfolio in any individual stock. 3. Focus on Quality and Income. A diversified portfolio of high quality, dividend-paying equities, can enable you to weather volatility while also providing income to fund your spending needs. High-quality companies tend to have strong balance sheets and prolonged track records of earnings growth and often pay a healthy and growing dividend. Regardless of current headlines, the vaccine rollout, or whatever tumultuous events may be occurring, doing these three things should help you maintain a sense of “calm amidst the storm,” so to speak, so you can continue making progress towards achieving your long-term financial goals. Mick Kuehn is a Senior Equity Analyst for Verity Investment Partners.
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