This new administration will hurt the returns of folks who simply buy an index fund like the SPDR S&P 500 ETF Trust (SPY) and call it a day. I call SPY “America’s ticker” because, well, most Americans own it.
Suffice it to say, the coming presidential term will usher in a true stock picker’s market—a time when prudent moves into, and out of, individual dividend payers will be key.
That puts holders of SPY, which has to represent the current makeup of the S&P 500 index, in a tough spot. Since it has no manager who can buy and sell as markets shift (a big reason why we prefer actively managed CEFs over ETFs), SPY holders are locked in as losing stocks cancel out some or all of the ETF’s winners.
Let’s run through six tickers worth pruning from your portfolio before the new administration is sworn in (in addition to SPY, of course!).
This post originally appeared at Contrarian Outlook.