Excerpt from Barron’s quoting DataTrek co-founder Nick Colas:
…. “With more pain likely for U.S. and global stocks, DataTrek Research co-founder Nicholas Colas told clients in a note that investors’ primary goal right now “should be to get to that point with a minimum of incremental damage to their portfolios.”
That means avoiding holding stocks or exchange-traded-funds that have made new 52-week lows, waiting instead for prices to level out for at least one to three months since cheap stocks and sectors tend to get cheaper when market valuations are being recalibrated lower, he says.
When should investors consider adding to stocks? Here, Colas tells Barron’s that markets don’t tend to hit a bottom in one day though—a reason Colas recommends investors buy a little at a time, or dollar cost average, into the stocks they like. For those looking for a sign, Colas says when the CBOE VIX Index hits 36, investors may want to add some risk and lighten up as it gets closer to 20. It’s currently at 32.75″….
Full article here on Barron’s.