Wondering what stocks to buy right now? You aren’t going to like this answer, because honestly, it’s not as simple as giving out a list of stocks that are perfect for every portfolio. Investing simply doesn’t work that way. It’s kind of like asking what’s the best meal to eat at a restaurant. What are the options? Are you allergic to shellfish? Do you love spicy foods? Hate spicy foods? Investing is a little like that.
If you want to know what stocks to buy right now, the first step is considering your investing temperament. Conservative investors approach investing differently than aggressive investors.
Conservative investing focuses on lower-risk securities and stocks of high-quality companies, which are often either blue chip stocks or large-cap equities. The goal of conservative investing is to make money over a long-term period while preserving one’s capital. Investments favored by conservative investors often have a history of profits, a strong balance sheet, and manageable debt.
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On the other hand, aggressive investors look to make big returns in the market. They will often buy and trade more than conservative investors and will target stocks or ETFs with higher levels of risk and greater profit potential. Aggressive investors will frequently target up-and-coming stocks that hit the market, such as penny stocks, mining stocks, or new technology. The investments aggressive investors target often come from companies with no historical earnings of dividend payments.
Many investors who focus on diversification will have some amount of their portfolio dedicated to both conservative and aggressive investments. Conservative investors may put 10% of their portfolio in aggressive stocks, while the opposite may be the case for aggressive investors. Understanding your investing temperament is extremely important before putting your money into the market.
The conservative approach to determining what stocks to buy right now
Here’s the good news. Once you know how to look for stocks that fit your investing goals, it’s a lot easier to determine what stocks to buy right now, what stocks to put on your watch list, and for that matter, what stocks to sell. In other words, you won’t need to be as dependent on a broker or advisor to help you make these determinations.
Your core holdings are the place to start. These primary holdings should be diversified throughout multiple industries and should be established, successful companies. They should have low debt, a strong balance sheet, and cash reserves on hand. A history of earnings and dividend payments to investors is even better to find in your core investments. Overall, your core holdings should be stocks you feel comfortable and confident about holding for an extended time, if appropriate.
Keeping your holdings diversified and allocated appropriately will help build foundational strength within your portfolio. Diversification protects your overall portfolio even if some of your investments lose money. We usually recommend a minimum of ten or 12 stocks that are positioned among several industry sectors. Furthermore, beyond the sector, it’s smart to allocate your investments between categories like risk level, size, type of stock, and the area or areas associated with the stock. For this type of stock, conservative investors will often look at blue chip stocks, value stocks, growth stocks, and dividend-paying stocks. They will look for investments with low risk and a consistent or cyclical business cycle. For investors living in the U.S., spreading the investments out by location will involve buying U.S.-based and international stocks.
Discover the key to long-term profits
Conservative investors often like to keep value stocks and traditional ETFs in their portfolios, especially during times of market volatility.
Value stocks present an opportunity to buy low-risk stocks, while traditional ETFs provide diversification and allocation by design. ETFs also involve lower management fees than many other investments, which can make these investments better deals.
What do you look for when considering what stocks to buy right now?