October 2, 2023, 3:02 pm EDT
Utility (XLU) -5% sector suffered a big loss today. Higher rate environment squeezed this sector to death because of higher debt.
REIT (XLRE) and consumer staples (XLP) also suffered badly in the higher rate environment.
Here we can see even these traditional defense sectors are not immune from the tough market. It means that there are limited places to hide from the financial storms in the stock market.
So, the best strategy to protect a portfolio is to raise the cash level or reduce exposure during the coming tough time.
There could be a few individual stocks that could survive and outperform the market. But, the chance to select the winners in the next 3-6 months is low. Therefore, trimming weak position and avoiding new position could be right strategy in this environment.