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No plan survives first contact with the enemy

PUBLISHED Jul 20, 2021, 7:54:05 PM        SHARE

imgKevin Matthews II

No plan survives first contact with the enemy By Kevin L. Matthews II

With earnings season for the second half of the year underway, it is the perfect time for investors to re-evaluate their positions and consider updating their investment strategy for the remainder of the year. Let's take a quick moment to recap what has happened in 2021 thus far and use that information to highlight a few companies that are poised to succeed through the end of this year.

At the start of 2021, the outlook for the stock market was simple. At the time, there were two places that were perceived to be the most profitable strategies. First, was the focus on reopening. With an increase in vaccines being available, travel companies like Carnival Cruise (CCL) Lines, Delta Airlines (DAL) and even newcomers like AirBnB (ABNB) were among the most popular stocks for expected gains.

Next was the focus on the new administration. After the official election results were announced, it was expected that companies with a focus on cannabis and green energy would stand to benefit in a Biden White House. For many, this included companies like Aurora Cannabis (ACB) and Canopy Growth (CCG) along with Nio (NIO) and Tesla (TSLA). Year-to-date all of these companies have failed to beat the performance of the S&P 500.

So, what happened and how can you position yourself for success for the rest of 2021? In short the quote, “No plan survives first contact with the enemy,” fits perfectly here. The enemy in this case was the unknown. For the first quarter of the year it was GameStop (GME) and AMC (AMC) that dominated headlines. Next, were fears of inflation and skyrocketing prices in homes and used cars. Lastly, there is the looming infrastructure bill in Congress. On January 1, 2021 these themes were largely unexpected and could not have been accounted for in advance.

Moving forward however, there are a few factors that can help you make sound investing decisions through the end of the year.

Bank on banking Bank stocks like JP Morgan (JPM), Capital One (COF), Bank of America (BAC) and others were poised to succeed this year and should continue to do so the next several months. Why? Banks benefit from this type of economy in a few ways. First, as the economy reopens banks will see fewer losses as people go back to work and resume payments for credit cards and other expenses. Second, with interest rates at near record lows borrowers are incentivized to borrow and have been one of the catalysts for the rising costs in the housing and used car markets.

The housing market As mentioned previously, the housing market has been a major theme for the market this year. Currently demand is outpacing supply and at some point in the future this will correct itself. Until then stocks like Lowes (LOW) and Stanley Black & Decker (SWK) should continue to see strong to moderate gains. This is because the demand for home improvement and maintenance should remain consistent as new buyers enter the market and sellers make repairs to increase the value of their homes.

Inflation proof investing
Inflation, which is defined as the rising cost of goods, has been a major source of concern for investors. However, not every company is as susceptible to the threat of inflation as others. Companies like Alphabet (GOOG) and Facebook (FB) are companies that should be at the top of your list. This is because their business does not rely on physical products like Apple and other companies that could be under pressure as manufacturing costs increase on certain materials.

I/we have a position in an asset mentioned



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