Stocks highlighted in this article include:
Diamond Foods, Inc. (
DMND),
Nash Finch Co. (
NAFC),
Chemed Corp. (
CHE), and
Emergency Medical Services Corp. (
EMS).
When markets are in turmoil it seems that many investors seem to throw logic out the window. While sustaining losses can cause anyone's blood pressure to rise, how we react to said losses is what separates the successful from the frustrated.
Many of us compartmentalize information and gathered throughout our years in an unconscious effort to save time and cognitive energy. While this psychological process can help us cut corners in our everyday life, it can prove disastrous for your retirement.
An Emotional Response
After seeing a downturn in their account balance many investors will compartmentalize all stocks into one negative, costly asset class. Consequently investors will often choose to avoid stocks all together. However, in any market there are firms that do well. Additionally, market timing has proven to be ineffective time and time again. So, the important mental strategy to adopt now is one of defensive and, most importantly, logical portfolio construction.
A Logical Solution
Simple steps can be taken to find stocks that will out-perform and perhaps prosper in tough economic times. Before even looking at fundamentals, take a look at the businesses that consumers can not do without. An easy way to go about this is looking at your own budget.
