How Investors Can Beat the Winter Blues

NEW YORK (TheStreet) -- In addition to being personally disruptive and annoying, the harsh winter weather is having an impact on economic activity. Recent reports on jobless claims, job creation and leading economic indicators have all been impacted by the repeated snow storms and severe weather that has plagued much of our nation.

  • Jobless claims have fallen more than anticipated. The consensus agrees that this is weather related.
  • Job creation has been suppressed. The conventional wisdom says that this is weather related.
While the above two points may seem positive and have bullish implications -- they'll revert to the norm after the weather improves -- but they have had a real drag on economic growth.
  • As a result of bad weather, Q1 2014 GDP growth will likely be revised down.
  • As weather moderates, even if it's just briefly, expect a spike in jobless claims as a result of the backlog.
  • Unemployment figures could uptick later in February, surprising investors.

Investors can beat these winter blues by remembering that although the economic effect of the severe weather is real, it is also temporary.

As such, investors should not panic or fall prey to fearmongers who will be quick to blame the implementation of Obamacare, Emerging market instability or Fed policy as the root cause of the downturn.

What should investors be concerned about?

  • Staying focused on their long-term objectives.
  • Reviewing their portfolio holdings on a monthly basis to ensure that each investment still fits the goals it was meant to fulfill.
  • Being emotionally detached. Don't fall into the trap of "I'll hold onto the stock until it gets back to what I paid for it."
  • Understanding that the lack of volatility in 2013 was abnormal. Ergo, expect more market volatility and embrace it.

Regarding the last point -- setting expectations and coming to terms with what will likely be a volatile 2014 -- if the S&P 500 Index (SPY) has been any indicator, investors who are looking to expand their exposure to equities should look for companies with some key characteristics. They are:

  • A strong balance sheet,
  • A visible and predictable revenue stream, and
  • An above-category average growth outlook.

Companies with these features will weather just about any storm or correction to come.

Investors should select entry points based on technical indicators, not emotional ones. They should adhere to a strict sell discipline when fundamentals change. And finally, they should utilize covered-call writing and other options strategies to reduce risk when and where appropriate.

Overall the economic improvements continue to be consistent and at a moderate pace, indicating that they are sustainable. We are not in bubble territory.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Oliver Pursche is the president of GGFS, a boutique money management firm headquartered in Suffern, NY. Pursche is in charge of all business operations and serves on the firms' Investment Committee, Executive Committee and Board of Directors. Pursche is also a co-portfolio manager of the GMG Defensive Beta Fund (MPDAX).

Over the course of his career, Pursche has had the pleasure of working for venerable firms, such as PaineWebber and Neuberger Berman, as well as taking graduate courses at the University of Pennsylvania's Wharton School of Business. Most recently, Pursche published his first book, Immigrants: Unleashing the Economic Force at our Door.

Pursche is a trilingual financial services executive with more than 20 years of industry experience. His professional focus is on improving organizational structures and efficiencies, particularly in sales and the sales & marketing area. In the case of GGFS, Pursche helped four-fold AUM and five-fold revenues, as well as double profit margins from 2005 to 2013. Pursche accomplished this mainly through sales coaching, re-engineering the marketing processes and having an absolute focus on ROI.

Pursche is a frequent guest on CNBC, Fox Business News and Bloomberg Television. He also writes weekly columns for The Wall Street Journal Trading Deck, Forbes.com, Minyanville and The Street.

Pursche serves on the Advisory Board of the Cherie Blair Foundation www.cherieblairfoundation.org, which focuses on helping women entrepreneurs around the world. He is a member of the New York City Ballet Serenade Society and a member of the Advisory Board at Gemini Fund Services.

Pursche lives in Fairfield, CT with his wife Virginia and their two dogs. For a more complete biography, visit http://about.me/oliverpursche. Follow him on twitter @opursche

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