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How to Invest When the Market Can’t Make Up Its Mind


Stocks have been even more fickle than usual.

The main stock indexes are all up this month, and they have had double-digit gains since January. But it has been hard for traders to muster much enthusiasm. Despite the recent rallies, stocks haven’t made substantial net gains since the beginning of last year.

For the American economy, the signals are perplexing. The Federal Reserve’s interest rate cuts, periods of trade war de-escalation and the low jobless rate have allayed fears of a recession.

But manufacturing has been shrinking rapidly, and global trade has been deteriorating amid signs of a broad slowdown. The impeachment inquiry and the trade dispute, both large, all-consuming beasts, could send the economy careening.

Markets are mid-teeter, and the question for a long-term investor is how to end up on your feet regardless of where they fall.

Our quarterly report on investing offers some advice: At a time of heightened uncertainty, it may be smart to be cautious.

Conrad de Aenlle found that many traders were avoiding major commitments. Some suggested moving money abroad, or into underappreciated securities known as value stocks.

The everlasting advice to make sure your portfolio is diversified among stocks, bonds and cash holds especially true right now. And it makes sense to ask whether you are comfortable with the risks you are taking — and to increase the margin of safety, if you are not.

One sector where long-term investors might find some stability is agriculture. As the world’s population grows, Tim Gray reported, “American farmers and the companies that support them are likely to continue to help nourish the world.”

Some people turn to books for answers in uncertain times. And popular volumes on personal finance can be an enticing place to start.

While the investment analysis in best-sellers by Suze Orman, Dave Ramsey and Robert Kiyosaki may be inadequate or out of date, the advice they give can still be useful. Namely, Paul B. Brown wrote, “prepare for the inevitable when you have time.”

Bonds don’t usually rack up eye-popping, short-term gains, yet they did over the last year as interest rates fell. Don’t count on that happening again. But bonds provide steady income — and they can buffer a portfolio when stocks fall.

In an essay about WeWork and other troubled start-ups, John Schwartz wrote that the best way to survive an exciting economic time might be to stash your money in something boring. “Going over Niagara Falls in a barrel is exhilarating. Compound interest is not, yet it is more likely to float you safely to retirement,” Mr. Schwartz said.

The rest of our report might relieve some of your anxiety and answer your questions about how a long-term investor might weather rocky waters. See the rest of the report below.


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