A Market Cycle Built for You

East Coast, West Coast …

The conventional wisdom used to be to buy East Coast companies during bear markets, West Coast companies during bull markets. With the East Coast concentration in consumer products and pharmaceuticals, and the West Coast focus on technology and cyclical companies.

While that approach seems hopelessly simplistic, it does contain a nugget of truth: there are sectorial distinctions in the market that work better at different points in the business cycle. During downturns, defensive companies like Proctor and Gamble or Johnson and Johnson do well; during expansions it’s cyclical companies such as Intel or Boeing that tend to lead. (In my mind, Boeing is still a West Coast company.)

How do you know when to switch? That’s actually pretty simple. Six to nine months after the start of a recession it’s usually profitable to be more aggressive. A famous investor once said, “The time to buy is when the blood is running in the streets.” And when to get cautious? After you’ve doubled your money is often a good time to even-up—not to get out of the market, just less aggressive.

No one rings a bell at the market’s top; the only sure thing is that six months after a downturn, everyone will claim to have predicted it.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-03-12T09:00:40+00:00 March 12th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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