Let’s be real: Investing during market chaos is not for the faint of heart. I’ve had more than a few moments where I asked myself, “Why did I even check my portfolio today?!” However, even in times of volatility, there are companies that can weather the storm. Today, I’ll share my approach to finding such companies.
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Focus on Needs
When everything is falling apart, I don’t chase the next AI breakthrough or other hype technology. I look for companies that sell something people want, regardless of the economic situation. These could be essential products or services that are hard to live without. The most important thing is stability of demand.
Financial Strength
I dig into companies’ balance sheets with the same care I give my ex’s Facebook. Two numbers matter most: debt levels and cash reserves. Companies with low debt and significant reserves are better prepared to weather tough times. They can continue operating and even benefit from crises by acquiring assets at a discount.
Market Leaders
A volatile market reveals weak leaders, so I pay special attention to the quality of management. I follow CEO interviews and financial conferences. It is important to understand how the management plans to cope with current challenges and what strategies they use for long-term growth.
Dividend Aristocrats
One of my preferences is the so-called “dividend aristocrats” - companies that have increased their shareholder payouts for many years. This is a sign that the business is stable and can generate sustainable cash flow even in difficult times.
Assessing the risk of obsolescence
Another important question: can the company's products become obsolete? Technological changes occur quickly, and companies must adapt to new market conditions. I try to avoid investing in businesses whose products can be replaced by more innovative solutions.
Portfolio Liquidity
I always keep 10-15% of my assets in cash or short-term bonds. This gives me flexibility and the ability to quickly react to market changes or take advantage of unexpected investment opportunities.
In conclusion, I want to emphasize that investing in times of market instability requires discipline and patience. However, following these principles, you can not only preserve your capital, but also increase it in the long term.