These two strategies can help you stay diversified in any kind of stock market
Summary
For example, against a holding in Club name Alphabet (GOOGL), where earnings estimates will be closely tied to advertising budget expectations that are themselves hostage to economic growth forecasts, one may take a position in Procter & Gamble (PG), the consumer staples giant that investors will seek safety in when economic forecasts deteriorate because the companys sales are tied to more recession resilient offerings. Both will get hit on the personal computer and consumer retail sales side in a slowdown, but are also likely see more resiliency in their cloud offerings through Microsoft Azure and Amazon Web Services (AWS). When China reopens, the names that stands to benefit most are Starbucks (SBUX) and Estee Lauder, perhaps enough to offset weakness here in the U.S. and is in no way tied to the semiconductor dynamics. We need names without the China exposure, like beer giant Constellation Brands (STZ) which generates 100% of sales in the U.S. and Canada and doesnt have to worry about a supply chain tied to Chinese policies. Bottom line By constantly considering the possible outcomes of certain events — and reevaluating our views as new data comes in — we can buy and sell holdings to create a diversified portfolio to help mitigate the risks of any market.