The month of March saved the first quarter of the year from being a complete washout, but the market is still down substantially from its highs as the recession enters its seventeenth month. The best performing sector of Q1 turned out to be tech, which actually rose 4 percent. And of the 30 stocks that make up the Dow Industrials, only three of them were up in the first quarter – and two of those, IBM and Intel , were in tech.
So are tech stocks still the place to be putting your money as the second quarter gets underway? Tim Maurer, director of financial planning for The Financial Consulate, is hesitant. He prefers other asset classes, such as Asian stocks, which he believes are undervalued. It’s hard to ignore a $2 trillion surplus in China and a $1 trillion surplus in Japan as the U.S. struggles under the weight of a deficit of similar magnitude, he says.
A whipsaw quarter like the one we just experienced proves one thing and one thing only to Ivory Johnson, director of financial planning for Scarborough Capital Management: no one can predict what’s going to happen in the short term. That’s why he’s perfectly comfortable repeating the various mottos of OTM: know what you own, buy protection on the downside for equities and diversify, diversify, diversify.