The market has again hit overheated levels. Our valuation tool, which, in a pricey market will sport 20 stocks, about 8 of which are in good value range is down by 50%. Only 10 stocks make our “window” and of them, only two, Abbott Labs (ABT) and France Telecom (FTE) are still in an attractive range, although they were far more so earlier in the year.
We have already positioned stock portfolios to some of the high yield companies that were discussed here previously.
If you have made good money, particularly in a stock that would be market sensitive to a correction or two, now may be a good time to sell it and take your profits. CDs trade at below-inflation rates after taxes. Money markets have had troubles in severe corrections cashing out quickly. We feel that high yield stocks are your best bet for return and relative stability (They’re still stocks, though, and subject to some level of correction along with the market. Use the charts from 2008-2009 as your guide to see how well these companies do in a downturn.)
If you see a stock, however, that can ride through a few oil-driven corrections (The likely thing to be blamed for a correction), then you should just consider sticking with it and riding out this latest wave on your stock surfboard.
When the wave crashes, it will be time to buy again.
The Genius Guide to Value Investing 