This article originally appeared on Jan. 31, 2014, on RealMoney.com. To read more content like this plus see inside Jim Cramer's multimillion-dollar portfolio for FREE... Click Here NOW.
"If you cannot be chaste, be cautious." -- Spanish Proverb
One thing seems certain early in the new year. Volatility is going be much higher early in 2014 than during the pretty much straight up market in 2013. This volatility is being driven in a large part on concerns around emerging currencies and markets as well as what appears to be a slowdown in China.
Investors have probably heard more about the Turkish Lira, Argentinian Peso and Hungarian Forint in January of this year on CNBC than in all of 2012 and 2013 combined. These worries could last for awhile until the market becomes more comfortable that things are starting to stabilize overseas.
The slowing growth in emerging markets is starting to show up as disappointing sales figures in earnings reports from global companies like Diageo (DEO)and Unilever (UL) as well. I believe investors are best served here by underweighting this sort of multinational play that is relying on emerging markets for a good portion of their growth story. I would also avoid commodity plays like miners right now.
For my own portfolio, I am using the same strategy as the president did in his recent State of the Union speech; I am playing "small ball." The additional funds I am adding to the market on dips and going to safe domestic firms with little to no overseas exposure. I am only nibbling right now as the market feels like it has further movement to the downside. Below is an example of one of these safe domestic plays I am very comfortable taking a bigger position in at current levels.