BigStockTrends com Updates Model Portfolio Allocation, Publicly Viewable
Released on: February 14, 2008, 2:28 pm
Press Release Author: BigStockTrends.com
Industry: Financial
Press Release Summary: The recent stock market shake-up and economic turmoil have prompted BigStockTrends.com to change their model stock portfolio allocation. The website is now suggesting that investors move to a more defensive posture, and focus on positions that tend to do well in challenging economic environment
Press Release Body: The suggested sector and style allocation of BigStockTrends.com has been updated, reflective of recent changes in sector and market cap leadership as well as a slowing economy. The portfolio has been designed to offer maximum reward and minimal risk for the scenario investors are likely to experience over the next several weeks.
The model portfolio\'s goal is to overweight areas that appear to be better opportunities in the foreseeable future, while under-weighting sectors that are likely to underperform the overall market during the same time-frame. By doing so, BigStockTrends believes its followers have a better chance at achieving above average returns while actually taking less risk.
The most recent update responds to the Federal Reserve\'s recent decision to lower the Fed Funds rate from 4.25% to 3.0%. Also, the portfolio is more conservative than usual, as BigStockTrends believes a recession is already underway; certain kinds of companies perform better than others in a less robust environment.
Also, the major correction from late last year and early this year has inflicted some technical and psychological damage that can\'t readily be overcome, and may affect how certain sectors perform in the coming months.
Analyst James Brumley notes \"The investing landscape is different now than it was just a few weeks ago. The Fed has signaled they\'re desperate by making a couple of drastic rate cuts, and the recent G7 conference indicated that other global economic leaders were also concerned about a worldwide slow-down. The U.S. is likely to already be in a recession, based on rising unemployment and decreased capacity utilization. Inflation may also continue to rise beyond manageable levels. We believe investors should adjust their investment portfolios accordingly.\"
The most recent strategic changes include adaptations for inflation and economic contraction. For instance, the portfolio suggest over-weighting basic materials, since materials prices - and their underlying stocks - tend to rise rapidly when inflation is higher than average. Simultaneously, as a cooling economy continues to temper consumer spending, consumer staple companies (such as grocers, personal products manufacturers, and food processors) tend to outperform other sectors. They are considered \'defensive\' stocks in that economic contraction can\'t stifle demand for basic necessities.
The modified portfolio also recognizes a shift in the leading market cap growth and styles. Last year\'s leaders were all growth stocks; the new allocation favors value stocks, as the BigStockTrends analysis team has spotted clear, new leadership from value stocks in just the first few weeks of 2008.
BigStockTrends.com is a development project of BigTrends.com devoted entirely to investors and traders who focus exclusively on stocks and ETFs. All facets of stock ownership are examined, including swing trading, long-term investing, portfolio allocation, and money management. Specific stock and sector ideas are provided on a regular basis. The site\'s free e-newsletter delivers all of this information straight to each reader\'s e-mail in-box.
To learn more about BigStockTrends click below.
Web Site: http://bigstocktrends.com/index.php/2008021123/Portfolio-Allocation/Suggested-Portfolio-Allocation-Update.html
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