Each week, we publish a roundup of the latest profit plays and asset-protection moves our experts gave Money Morning Members the week before.
This week, we did it a little differently. To address recent events, we put together a list of the best stocks to buy after a stock market sell-off.
That's because October has been a doozy of a month for U.S. stocks. So now we want to help readers navigate the volatile market.
The Dow Jones Industrial Average lost 5.43% this month by Oct. 16. The S&P 500 was down 5.55% in the same period, and the Nasdaq suffered a 6.14% decline. The U.S. 10-year Treasury yield fell under 2% for the first time in 16 months. And the VIX (volatility index) - also known as the "fear index" - hit 30 last week for the first time since 2011.
But the markets corrected a bit this week. The Dow's up 2.35%, the S&P has gained 3.88%, and the Nasdaq 4.98%.
In recent weeks, our experts have equipped investors to protect their portfolios during a sell-off. Not only that, they've highlighted ways to profit from it.
"One of the worst things investors can do is sit on the sidelines," Money Morning Executive Editor Bill Patalon said. "Other investors may be panicking and leaving the market, and by doing so, they miss out on huge gains when the markets turn around. I've seen it time and time again."
The best part is that our experts' picks are good buys even if we don't ultimately hit stock market correction territory...
Money Morning's "Best Stocks to Buy After a Stock Market Sell-Off" List
- Some people forget that the stock market often pulls back after a good run. Still, it's hard not to let fear chase you out of the market. So let's kick off our "best stocks to buy after a market sell-off" list with a pep talk from Money Morning Chief Investment Strategist Keith Fitz-Gerald. Fitz-Gerald is a seasoned market analyst with 33 years of professional trading experience. He said "bring it on" to the stock sell-off in an appearance on FOX Business' "Varney & Co." on Oct. 13. He loves that the sell-off made some premium stocks available at a rare discount. Watch Fitz-Gerald's interview to see the three picks he mentioned here...
- The U.S. Federal Reserve's policies have put the market at artificial highs. That's why Fitz-Gerald told readers he believes we need a market correction now more than ever. You see, a correction is good for the U.S. economy. Risk weeds out weak money. That's why fad-oriented companies like SodaStream International Ltd. (Nasdaq: SODA) and GoPro Inc. (Nasdaq: GPRO) got clobbered, while fundamentally solid brands like Becton, Dickinson and Co. (NYSE: BDX) have done just fine. Plus, the sell-off has created an opportunity for investors to apply the classic money-making mantra, "Buy low, sell high." To this end, Fitz-Gerald tacked on another recommendation (in addition to the three from his interview above) that takes advantage of these record lows. Even with this week's market climb, all four of these stocks are still good buys.
- There are a lot of ways you can profit when the markets change direction. Buying low and selling high is certainly one of them. But Fitz-Gerald's already got you covered on those kinds of picks. He recently told readers about two other profit-making methods. First, he recommended a mutual fund that will reduce your overall portfolio volatility. "It's so effective that I advocate keeping a permanent allocation for just these kinds of market conditions - that way you'll never get caught by surprise," Fitz-Gerald said. Second, he highlighted an options play for more aggressive traders. If your goal is quick profits, you don't want to miss this suggestion...
- Fitz-Gerald gave readers one final tactic to profit from the market's downturn - selling short. This powerful short-term strategy is well suited for uncertain times. The idea is to find overvalued stocks and sell them while the market's dropping. But Fitz-Gerald advised readers to look beyond that. "You always want to find some other compelling reason for a potential failure or lower valuation," he said last week. That's exactly why Fitz-Gerald recommended shorting this stock - the Ebola outbreak may obliterate this company's earnings...
- Money Morning guest writer and CEO of U.S. Global Investors Inc. Frank Holmes chimed in last week with advice on what to buy when stocks go down. He pointed out that right now, the dollar is significantly overbought relative to crude oil. In fact, the greenback's up almost two standard deviations, while crude oil's down almost one standard deviation. Holmes said that historically, those numbers mean it's a perfect time to buy crude oil. That's why he's recommending stocks in this sector - some of the best offerings are averaging a return on equity of 25% and paying a dividend yield of about 2.7%. On top of that, many have outperformed the S&P 500 Index so far this year...
- Bonus video content: Earlier this month, Fitz-Gerald appeared on CNBC World to explain what's behind October's stock market sell-off - and key indicators to watch in the months ahead...