Navigating Investment in Uncertain Markets

• (1:00) - What Is Dollar Cost Averaging And Does It Really Work?
• (4:45) - Should You Avoid Stocks Around A Changing Administration?
• (7:35) - What Is The PEG Ratio and How Should You Be Using It?
• (12:15) - Do Sentiment Metrics Really Impact The Stock Market?
• (16:20) - How Can Investors Find The Best Money Market Fund For Their Portfolio?
• (20:40) - Should You Be Considering Investing In Gold Right Now?
•  (24:00) - Breaking Down The Big Name Investing Trends: What Can We Learn?
• (26:40) - Episode Roundup: VOO, IVV, SPLG, MMKT, GMMF, PMMF, GLDM, IAUM
•                 [email protected]

In this episode of ETF Spotlight, I speak with Dr. Derek Horstmeyer, a professor at George Mason University School of Business and a regular contributor to The Wall Street Journal. His research focuses on ETF and mutual fund performance.

During periods of economic uncertainty, particularly at the start of a new administration, bonds—especially shorter-term ones—tend to outperform stocks. However, as uncertainty fades, stocks, and particularly small caps, often outperform bonds.

Even in uncertain times, it’s generally better for investors to focus on the long term rather than attempting to time the market. Dollar-cost averaging is especially effective in volatile markets, helping to reduce emotional decision-making.

Many experts recommend dollar-cost averaging to invest for the long term in ultra-low-cost S&P 500 ETFs, such as the Vanguard S&P 500 ETF VOO, which should be a core component of any portfolio.

Recent consumer sentiment surveys indicate a darkening outlook for the economy. CEOs of many consumer-facing companies have also expressed caution about consumer spending during their recent earnings calls.

If consumers grow increasingly pessimistic about the economy, they may begin cutting back on spending, potentially triggering an economic downturn. Do sentiment metrics matter to the markets?

Many investors are choosing to stay in cash or invest in safe-haven assets like gold, which can provide an effective hedge against recessions. Assets in money market funds recently topped $7 trillion, and now, three low-cost money market ETFs are available to investors.

The SPDR Gold MiniShares Trust GLDM and iShares Gold Trust Micro IAUM are the lowest-cost gold ETFs, making them excellent choices for buy-and-hold investors.

Dr. Horstmeyer’s research suggests that once a stock-market trend has been identified and named, its best gains are typically behind it. This raises important questions for mega-cap stocks like NVIDIA NVDA, Apple AAPL, and Microsoft MSFT, especially given the recent underperformance of the so-called “Magnificent Seven.”

Tune in to the podcast to learn more.

Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email [email protected].

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This article originally published on Zacks Investment Research (zacks.com).

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