Based on the strong print of the major indices since late last month, the idea of deliberately targeting reliable stocks for a volatile market might seem overkill. In the past 30 days, the benchmark S&P 500 gained almost 6%. Since the start of the year, the index moved up 18%.
On the surface, that might seem like a no-lose proposition. After all, if you buy the snooze-inducing SPDR S&P 500 ETF Trust (NYSEARCA:SPY), you’re beating the inflation rate and adding a decent return on top of that. Under this context, it’s easy to see why some would consider safe stocks to be an overly pensive strategy.
However, it’s important to point out that while we see some key improvements, inflation remains stubbornly high. As well, excessive borrowing costs have hurt spending for high-ticket items, likely contributing to an erosion of demand for electric vehicles, to mention just one example.
With the real possibility of red ink in 2024, investors shouldn’t outright dismiss these reliable stocks for a volatile market.
This post appeared first on InvestorPlace.