Just my thoughts about investing in this market high. As you may know, the Straits Times Index and S and P 500 index is now running at their all time highs, stocks running high how does one invest in this booming market.
I'm a firm believer of value investing, there's only so high the indices can go. As such, in selecting stocks,one has to be cautious.The strategy used would follow two principles
1) Select stocks from defensive or anti corelated industries to prepare for the fall. REITs for example, pay a handsome dividend and is generally non corelated. Food stocks are another options, since they are cheaply priced as investors go crazy on commodities and technology and biotechnology.
2) Use bonds. Bonds have been shown to be largely non corelated and are rather attractively priced,with interest rates at their highs.
If one is adventurous, one could always opt for a part of the portfolio in technology to ride the possible boom....but remember the party never lasts forever.
Linus
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