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With the bull market continuing, where should you look to invest now?

by , 26 August 2014

The bull market is marching on even though the market has been a bit more volatile of late.

So if you have cash to invest, where should you put it?

Let's take a closer look…


Look to large-cap shares


There are always opportunities to make money on the stock market if you’re prepared to do some digging.

You might think that as stocks continue to rise, the chance to make money from investing in shares diminishes. But there are still shares that have plenty of upside left.

Alexander Green of Investment U spoke to Rick Pfeifer, the chief portfolio manager of Fund Advisors of America to see where he’d put his money. He has been in the business nearly 30 years and follows a contrarian investment strategy.

Rick believes when bull markets are long in the tooth, it’s time to look to the biggest shares on the stock market. Small-caps tend to do well early in a bull market. Large-caps tend to do best in the later stages of a bull market.

With the bull market already over five years old, and that means focus on the large companies. The exception being Japan as it’s still early in a bull market.


Boost your portfolio with income


But Rick also thinks that you need to think about the fixed income portion of your portfolio. Fixed income will give your portfolio some defence against falls in the stock market.

For fixed income you can look to bonds, such as government bonds. Or you could buy into a bond unit trust.

With bonds, you know how much you’ll receive in interest payments through the year. And this can give your portfolio some stability.

If you’re looking for income, you can also look to real estate investment trusts (REITs). These property investment companies generally pay out a good dividend yield.

There are around 35 different REITs listed on the Johannesburg Stock Exchange. Their current dividend yields pay up to around 10%.

So there you have it, where you should invest as the bull market continues.

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With the bull market continuing, where should you look to invest now?
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