The odds are good that June 16 marked the stock market’s low, and we are in the early stages of a new bull market. Inflation is rolling over. Supply chains are repairing. There is enough terror in the market to suggest we are near the bottom. I encourage you to increase stock exposure.
Playing armchair psychologist, that may be tough given the trauma you’ve experienced in this bear market in stocks
SPX,
-1.25%.
To “trick” your mind into going along, consider focusing on “safe” names. These won’t go up much as speculative names. But they’re less likely to fall hard in the volatility and possible retest of June lows. It’ll mean you are less likely to get shaken out. Then plan purchases in three to five steps, to average in. The big question: How to define “safe?” Outperforming managers offered their view in this column of mine. One longstanding, go-to approach for me is to favor wide moat, five-star stocks at Morningstar Direct. The wide moat suggests safety because moats tell us a company has competitive advantages — like superior brands and technology, trade secrets, and the bargaining power that comes from size. Companies with moats lose less business when downturns happen. They take market share. The five-star rating implies safety because since it trades far below Morningstar’s conservative discounted cash flow valuation. The discount tells us a lot of the damage has been done. Other investors notice this, which suggests some price support as they buy. Morningstar Direct is allowing me to share its complete list of wide moat, five-star stocks. I’ll then single out five favorites that offer cyclicality and potential market beta to enhance upside in a market reco …