In the space of just a couple months, the sentiment in Australian and global markets have shifted greatly. The current volatility and uncertainty have left investors asking one question: What do I do?
Unique macroeconomic trends and have us living in unprecedented times and the world is trying to make sense of varying ideas across the board.
The local share market is in a short-term bull market; however, the overall landscape is quite bearish. Hawkish monetary policy (rising interest rates) and inflationary pressure have given a rise to volatility and higher uncertainty for investors as to where they should put their money.
When the market plane is uncertain, an important (yet sometimes difficult) task for investors is to go back to fundamentals, keeping in mind that the downturn will not be permanent.
It is imperative to choose companies with strong cash flows, long-dated earnings and experienced managed in order to be the best positioned investments to take advantage of the higher volatility, especially now with the RBA’s increasing rates throughout the year which will send investors to other markets to search for higher returns.
Stock Specialist suggest 3 main defensive sectors to invest that include non-discretionary sectors such as healthcare, utilities and consumer staples. These sectors tend to outperform even in periods of high uncertainty and volatility, which we have seen only recently during the start of the COVID-19 pandemic.
See below various suggestions covered by Stock Specialist in these sectors:
Healthcare; Ramsay Healthcare, Resmend Inc & Medibank Private
Consumer Staples; Metcash Limited, Woolworths & Cleanaway Waste Management
Utilities; Origin Energy, AGL Limited