Summary: 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 Hit reply if you have any questions—I read them all!Follow me on Twitter @GlobalMarketUpd
