By Ryan Velez
The stock market is currently breaking records at the moment, with the Dow Jones Industrial Average closing above 19,000 for the first time. Due to this, the blue chip index is now on course to surpass the annual performance of the S&P 500 for the first time since 2011. Black Enterprise explains that the market is always going to be volatile—look at the massive drop following the election of Donald Trump as president versus its current state. At the same time, they also advocate investing for the long-term for purposes like retirement and higher education for one’s children. They have compiled a series of practical advice on how to react to historic milestones in the market, like the one currently ongoing.
The first one is not to overreact. Whether it’s the market dip such as the days before the election or the current time of growth, timing the market is generally a recipe for failure. Instead, discipline and long-term investing are the way to go. The past is never going to fully predict what is going on, but it works as a solid reference. When in doubt, seek out a professional to help you build a long-term portfolio.
When it comes to what to look for, oftentimes, the familiar is a good place to start. Targeting familiar companies and industries means that it is likely that your investment is with a market leader with a powerful brand presence. In addition, knowing a bit about the product and business methods of the company will help you feel more confident.
Outside of this, some stocks to invest in are those that tend to perform well in any market, especially in the time where the economy is recovering. These include industries like pharmaceuticals, personal care, household products, food and consumer staples. Think of areas that people make purchases in whether the economy is weak or strong. Dividend stocks, from companies that make cash distributions to shareholders on a quarterly basis, are a good choice as well.
One thing that Black Enterprise stresses in any market situation is being sure to contribute to your employer- sponsored 401(k) and 401(b) plans. These serve as great ways to build a nest egg for retirement, and sometimes your employer will match a portion of your contribution.