I wrote this post for new investors that may be risk-averse.
If you’re like me, you have a high tolerance for risk. You will have a portfolio that consists of companies on the cusp of innovative disruption. These companies’ stock prices tends to be quite volatile. You could be up 200%, and then give back more than half in weeks.
That kind of price movement may not sit well with some investors. If you fall in this category that’s fine, because I have a suggestion for you: Clorox!
Now, I am a believer that many old-line companies are in big trouble. They’re simply not moving fast enough to remain competitive. However, Clorox (NYSE: CLX) is unique. I believe they will continue to outperform the market for many years to come.
Clorox makes products that we must have on a daily or weekly basis, and that’s simply not going away. Consider the brands they own:
1. Clorox Wipes
2. Clorox Bleach
3. Hidden Valley Salad Dressing
5. Burt’s Bees
7. Brita Water Filters
8. Kingsford Charcoal
9. Fresh Step Cat Litter
I think you could sleep at night if you owned these brand names. You’re not going to set the world on fire in the way you would if you owned an Amazon or a Netflix, but that might not be your style.
That’s why I believe Clorox is a good choice for risk-averse investors.
Disclaimer/Disclosure Statement: Information in this article is not intended to be a recommendation to invest in any stock. Rather, it is presented for readers’ education and consideration when making their own investment decisions. The author has no position in any of the companies mentioned.
If you’ve been watching financial media lately, there has been plenty of discussion regarding the Federal Reserve raising interest rates.
So…how exactly does the Fed do that, and what effect can it have on the stock market?
For starters: the Fed doesn’t actually increase the interest rates directly.
The Fed has something called a discount window. The discount window is where banks, such as Chase and Bank of America, go to borrow money in order to maintain their reserve requirements. The reserve requirement is the amount of funds a bank must have on hand at all times.
So what happens is that the Fed will increase the discount rate they charge banks. The banks then take the increase and pass it on to us, the consumers, by raising their rates. That, in essence, is how the Federal Reserve increases interest rates.
A rate increase can cause sell-off in the stock market as investors, attracted by higher rates on bonds, certificates of deposit (CDs) and savings accounts, move their money into these “safer” places to avoid risk.
As I stated in yesterday’s post and in my book, events like this don’t matter when you’re investing for the long-term. Hold, hold, hold.
Almost anyone could benefit from receiving a copy of The Stock Market is For Everyone as a gift, because we all should have financial freedom as we advance through life.
At 24 pages, it’s a quick, easy read – and it gives you the basic information you need to know to get started right then and there. No jargon, no unnecessary terminology. Start with as little as $25.00, develop an investing habit that sticks for life, and watch your wealth grow.
Who will you share the gift of knowledge with this Christmas?
The Stock Market is For Everyone is available on Amazon in paperback format for $9.99 and as an ebook for $3.99.
I’ve shared this graphic by Morgan Housel of The Motley Fool here before. I’m featuring it again today because it is very relevant to the current market situation.
Hold on and be patient. History demonstrates it will pay off.