Market Strategy for November 2019 (Best Stocks To Buy Now)

The stock market is reaching all-time highs, but is now the time to jump in? I want to offer a few perspectives on how I am investing in this economic climate. If you are just learning to invest, please first read my article 4 Steps to Start Investing to acquaint yourself with the basics. If you are familiar with investing, please read on and share your insights as well.

Here is how I’m positioning myself in November 2019:

1. Skimming Off The Top. As the market has reached new highs, I’ve skimmed a bit off the top and taken some profits. As a long-term investor, I don’t like doing this too often but it helps to improve your cost basis. Just remember: sell high, and buy low. When people are celebrating new market highs, you should be finding some things to sell. When people are panicking on the down days, you should be shopping! When the market dropped big on August 5th, I put a good chunk into a S&P 500 index fund and am now up 10% — time to cash in on some of those profits.

2. Playing Defense. I’m a long-term bull and believe that the U.S. economy is strong, however there are a plethora of unknowns to deal with in the next 12 months, namely the 2020 presidential election. This era of uncertainty coupled with a glut of global capital (people need to put their money somewhere) is going to cause defensive equities to increase in value due to laws of supply and demand. Here’s how I’m playing defensive:

1. Buy Gold. Gold is the ultimate defensive play, and probably the longest running investment in human history (it’s not going anywhere). It’s a fairly safe investment because there’s a limited supply of gold in the world. Gold is currently at $1,500 per ounce and many financial analysts predict it going to $2,000. I personally expect it will top out around $1,800 in the next 12–18 months but that’s still a significant upside in uncertain times. I bought SGOL (an ETF) because of it’s low expense ratio and historical tracking of gold price.
2. Buy Treasuries and Bonds. When the global investing community feels nervous about political and economic events, they go into treasuries and bonds. This is one reason why we saw the yield curve invert earlier this year- people are flocking to safety. Not sure how to buy treasuries or bonds? I use ETFs as an easy way to access treasuries and bonds, building safety into my portfolio. Two of my favorites are MUB (municipal bonds, 2% tax free yield) and IGIB (corporate bonds, 3.5% yield).
3. Buy Utilities. My favorite defensive sector is utilities, namely electricity providers. These stocks are stable as they come and often pay big dividends. My personal favorites are Duke Energy (DUK) and NextEra Energy (NEE) but I’ve recently been loading up on the SPDR Utilities ETF (XLU) to limit the risk of owning any one stock while still yielding an impressive 3% dividend.

3. Buying CVS. I first started looking at CVS this summer when I noticed that the stock had fallen significantly 2015 high of $112 and was trading in the $50s. I believe this was due in part to their recent acquisition Aetna (a health insurance provider). And if there’s one thing that everyone knows about health insurance providers, it’s that they make plenty of money! I still wasn’t sure about CVS. I typically don’t like investing in brick-and-mortar retail and I see empty CVS stores everywhere. However, only 10% of their revenue comes from merchandise sales in their stores. It’s mostly from pharmaceuticals and that industry is only going to increase with the aging demographics. I think CVS is a long-term buy, I was lucky enough to get in at $60 and it’s now trading at $75 but I definitely see it as an $80 stock in the next few months and going pass $100 in the next 1–2 years.

4. Selling Facebook. It’s really hard for me to do this, but I think I will be exiting my investment position in Facebook for now. They have been on a tear and everyone on Wall Street loves the stock, which makes me think that now might be a good time to sell. I originally purchased Facebook in 2012 in the $20s when Wall Street thought it was a joke. My current hypothesis is that Instagram has run its course and saturated the market (no more growth) and that Google (GOOG) is a more effective source of advertising for businesses. Now I still think Facebook, Instagram and WhatsApp will be around and used by billions of people, but I think the steady growth that we have seen the previous 5 years will level off and that will cause investors to sell the stock, so I’m just trying to stay ahead of the curve.

5. Buy and Sell Energy. Earlier this year, I bought shares of ExxonMobil (XOM) because I think it’s a well-established company with a 5% dividend yield, but I’ve started to regret that decision and started trimming that position when it was trading in the low $70s. For investing, the oil sector should be avoided at all costs. This is partially due to low oil prices ($57 / barrel) diminishes margins throughout the entire industry. And for the next 12 months, I don’t think Trump is going to allow oil prices to get much higher. If you’re looking to invest in energy, I would recommend some renewable alternatives. Vestas Wind Systems (VWDRY) is a Danish wind turbine company that I picked up some shares in this summer, they just reported a fabulous quarter. There is an ETF that tracks renewable energy called “iShares Global Clean Energy ETF” (ICLN) that includes a good mix of wind, solar and utilities.

As we go into December, we will want to keep an eye on Black Friday / holiday shopping patterns to see if the consumer is spending more or less than last year. The answer could determine whether stocks stagnant or rocket in 2020.

While the market is unpredictable, there is an advantage to those who do the research, spot the trends, and take the risks. And if you’re in it for the long term, you have strong trends in your favor. Best of luck!