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In my April 13th article Jauntiness Returns I wrote
“But, low volatility gives us the chance to buy cheap portfolio insurance in the form of index put options against possible black-swans (sharp unforeseen market corrections).”
And indeed, market did have quite a significant “unforeseen correction” since then!
If you are as surprised as I am about the scope of the recent decline in share prices, you probably also ask yourself the question “where should I invest my money now?!”
If anything the recent market correction proved that stocks are volatile and always good for some unwanted surprises.
Nevertheless, well-selected quality stocks with high dividends still seem to be the best choice in the current environment.
Basically all other investment alternatives either trade at historically low yields (cash, highly-rated government bonds) or do not offer enough return to compensate the embedded risks (corporate bonds, low-quality companies, bonds of fiscally-stressed countries).
As you know, I try to focus on the most obvious aspects when analysing investments.
When comparing the dividend yields of 9.12% and 8.33%, from two companies recommended to my subscribers, to investment alternative you know what I mean by obvious these days.
Tim du Toit is the
editor of Eurosharelab.
Kindly note that this blog is published for
information purposes and is not investment advice. Please refer to our disclaimer.
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