Safe Stocks Underperforming. Yes, We’re In A Bull Market — Expert Says.

Forbes Money Investing Safe Stocks Underperforming. Yes, We’re In A Bull Market — Expert Says. Simon Constable Contributor Opinions expressed by Forbes Contributors are their own.

Author | Broadcaster | Journalist | Commentator | Speaker. Following May 28, 2023, 03:35pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin NEW YORK – JUNE 7: Tourists take pictures June 7, 2012 of the Wall Street bull several blocks from . .

. [+] the New York Stock Exchange in New York City. (Photo by Robert Nickelsberg/Getty Images) Getty Images It should be clear that we are in a bull market.

At least that’s what one market expert says. “In bull markets historically there’s less of a need, or no need at all, for the safest stocks,” writes technical analyst JC Parets in a recent report from his company AllStarCharts . Technical analysts forecast stock movements by looking at charts, amongst other things.

Safe stocks include consumer staples, a subsector of stocks that focuses on products that people purchase no matter what happens such as soap and toothpaste. The Consumer Staples Select Sector SPDR exchange-traded fund (XLP XLP ) tracks such stocks. Lately the price of that ETF has fallen significantly behind the benchmark S&P, Parets notes.

Low Vol Gets Crushed Another such safe sector is the low volatility stocks tracked by the Invesco S&P 500 Low Volatility ETF (SPLV SPLV ). Wall Street investors tend to buy this ETF when markets are in tumult such as during a recession. Just like the staples ETF, it has underperformed the S&P 500 index of large stocks.

Other underperforming safe sectors include utilities and healthcare, Parets says. “Historically when the S&P500 is outperforming these defensive sectors, it happens in healthy market environments,” Parets writes. Put another way, the current situation shows we are in a bull market.

Safe is a Losing Strategy Currently “It’s when these safety sectors are outperforming that stocks in general are usually under pressure,” or investors are experiencing in a bear market. But that’s not something to worry about unless the defensive sectors catch up to the S&P 500. MORE FOR YOU ‘It’s A Big Deal’—Crypto Suddenly Braced For A Huge China Earthquake After Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon And Solana Price Swings Dogecoin And Litecoin Transactions Soar As Memecoins Take Over 5 Massive Yields To Salvage From The REIT Scrap Heap Its also worth remembering that in bull markets those stocks with the largest betas tend to outperform low-beta stocks.

Beta reflects how much a given stock will move in relation to the S&P 500. A beta of more than 1 is high beta. Less than one is low beta.

The short takeaway from all this is that investors should embrace risk, at least for the time being. Follow me on Twitter or LinkedIn . Check out my website or some of my other work here .

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