December 25, 2021

7 Boring Stocks to Buy to Protect Against the Speculative Fallout

 

It’s time to go on defense

 


 

Naturally, as the major indices absorbed the news regarding the Federal Reserve’s upcoming rate hikes for 2022 — and not in a great way — many folks turned to Cathie Wood. A technology investor and the matriarch of Wall Street, Wood commands serious influence. And her words were to not deviate from the course because the truth “will win out.” Still, a slight shift toward boring stocks to buy might help.

 

According to CNBC, Wood’s ARK Innovation ETF (NYSEARCA:ARKK) lost a fifth of its value on a year-to-date basis since the close of Dec. 17. Under the much often cited narrative of buy low, sell high (or buy the dips in the contemporary parlance) the fallout in tech and other sectors might inspire buying sentiment. While that could be true, it’s also possible more pain is on the way, which bolsters boring stocks to buy.

 

In an interview with the Wall Street Journal, David Keller, chief market strategist at StockCharts.com, stated that, “Arguably the reasons why stocks have been so strong so consistently are now going away and those conditions are changing.” Some investors — though to be clear, not all — are concerned about the rapid spread of the omicron variant of the coronavirus. The uncertainty hinders growth names but may benefit boring stocks.

 

But arguably the most important impediment to the once-soaring demand for risk-on assets is the scheduled increase in borrowing costs. As WSJ noted, “Fast-growing tech names have been pressured by the prospect of higher interest rates, which make it less appealing to hold riskier assets.” Therefore, investors should be thinking about reliability and stability, which boosts the profile of boring stocks.

 

 

As well, the conspicuous correction could come down to common-sense dynamics. While there’s no upside valuation ceiling in theory for any particular asset, practically speaking, a sector can only go so high before it stalls out. With growth names having enjoyed a blistering season, it’s time to reconsider these boring stocks to buy.

 

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