December 20, 2021, 3:13 pm EST
When you heard the crowd chanted ‘Defense! Defense!’ in a sporting event like NBA games, it tells you that the ball is controlled by the other side and the best action is to defend.
This is what happened today in the stock market today. Looking at the sector bar chart shown, all defensive sectors are barely survived from weekly and monthly performance. There should be no surprise to see all sectors are down today when all major indexes lost more than -1% as of now.
COVID-19 Omicron outbreaks worldwide could be the reason. But, there are many troubles ahead in addition to this virus. Inflation, rising rates, debts, and Biden’s Bring Back Act all contributed to worries for the US economy in 2022.
The best strategy during this condition is to make sure your portfolio consists of defensive names in the following sectors: consumer staples, healthcare, utilities, and REIT. Remember only a few names are able to hold through the tough time. If you do not know how to identify them, it would be fine to stay with fewer positions in the portfolio and raise the cash levels.