Preservation of Capital

AI beater wrote a column · Aug 24 23:39

The market indices break new high and the preservation of capital becomes imminent.

History tells us that many stock investors just enjoyed a roller coaster riding. However, we don't know when the descending will come. It is even likely, though not very probable, that the desceding will not come during our life time. Nontheless, if we are prepared for a major market correction, lots of good investment opportunities will be present when the "dip" indeed comes. Am I worried too much if I miss out the AI boom? Not really. If the AI boom is true, my life will get significantly improved with the profit I have already made.

Firstly, I control my cash positions to be at least 33%. I will have my long-term stock investment around 50% of my total capital and short-term stock investment around 0%-16.7% of my total capital depending on the availability of opportunites.

Secondly, my long-term stock investment are in the defensive sector. I love $Berkshire Hathaway-B (BRK.B.US)$ since the Berkshire Hathaway has diversified lines of business, including insurance, steel manufacturing, transportation and asset management. These bring in steady income through the whole business cycle. I also love the health-care sector $Ishares Global Healthcare Etf (IXJ.US)$ including $Johnson & Johnson (JNJ.US)$ and $UnitedHealth (UNH.US)$, since the stock prices are reasonable and this defensive sector has some growth potential during economic boom. I also have some investment in consumer staples, including $PepsiCo (PEP.US)$ $JM Smucker (SJM.US)$ $JBS N.V (JBS.US)$ $Unilever (UL.US)$ and some investment in retailing sector, including $Costco (COST.US)$ $Walmart (WMT.US)$.

Thirdly, many over-heated economy grows into military conflict. Therefore, I have also allocated some capital into the national defense sector (interestingly also as "defensive" sector) $GLOBAL X DEFENSE TECH ETF (SHLD.US)$ .

Last but not the least, for my close relatives who do not follow the stock market closely, I advise them to hug tightly into their $SPDR S&P 500 ETF (SPY.US)$ and $Invesco QQQ Trust (QQQ.US)$...

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