Should Your Portfolio Strategy Focus On Geopolitical Events?

Wall streetMitchell Clark: Stocks have been choppy since the beginning of the year and geopolitical events are now the near-term catalyst.


It’s a good reminder that it’s worthwhile to review investment risk to equities and what you can tolerate in terms of potential downside with stocks.


As these pages are focused on the equity market, investment risk is always a priority. Portfolio risk can get lost in a bull market, but it’s still a huge part of the equation in terms of overall strategy.


There’s just so much beyond your control as an individual investor. At the end of the day, with stocks, it’s an investment in a business commensurate with a bet that its per-share worth (which is only definitive in the event of a buyout) will be recognized by a marketplace ruled by fear, greed, and emotions.


In late 1999, The Procter & Gamble Company (NYSE:PG) had an earnings miss and the stock was basically cut in half, as the hype related to technology stocks was coming apart. It took five full years for Procter & Gamble’s share price to recuperate from the sell-off; and while the company was still paying its dividends, that’s a long time for any equity investor.


Stocks always correct themselves eventually, but excessive pricing (like in other asset classes) can last for quite a while. Procter & Gamble’s long-term stock chart is featured below:


PG Procter Gamble Company Chart


Chart courtesy of www.StockCharts.com


In terms of portfolio strategy related to stocks, a multi-faceted investment strategy is key. This means varying holdings among industries, stock market capitalizations, dividend paying stocks, and pure-play bets.



(...)Click here to continue reading the original ETFDailyNews.com article: Should Your Portfolio Strategy Focus On Geopolitical Events? [The Procter & Gamble Company, The Clorox Co, Zep, Inc.]

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