It’s only March and already my inbox is full of questions about the “sell in May, go away” phenomenon. Traditionally, the May to October period is the most volatile for stocks and when you look at the performance of the indexes during this period it isn’t rosy. But does that mean that all stocks should be sold?
Not by a long shot. Let me tell you: the stock market is not the enemy. The real enemy is fear. It makes investors buy and sell at the worst possible times.
So instead of cashing out completely, the best way to prepare for seasonal volatility is by realigning your portfolio for maximum performance. If you want to avoid many of the headaches that come with summer trading, start by trimming the dead weight in your portfolio. Ensure smooth and steady returns by sticking with more conservative stocks.
And you can do this by checking your stocks in Portfolio Grader. When you run your holdings through this screening tool, take note of each stock’s Quantitative Grade (the current level of institutional buying pressure) and each stock’s Fundamental Grade (a weighted blend of eight financial metrics). Also check which of your stocks are rated as Conservative, Moderately Aggressive or Aggressive. Shoot to have 60% of your holdings in Conservative stocks, 30% in Moderately Aggressive and 10% in Aggressive.
I can’t stress this last point enough because aggressive stocks are the first one to take a beating in a correction, so you’ll want to limit your exposure to these “spicier” stocks. To get you started, here are 10 aggressively-rated stocks you’ll want to steer clear of in the coming months.
|Symbol||Company Name||Quantitative Grade||Fundamental Grade||Total Grade|