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Preparing For a Rough Economy? Here's How to Invest For 2019

The head of investment strategy at one of the biggest retail investment firms says high yielding dividend stocks are perfect right about now. And more....

Goldman Sachs published a note Monday saying the U.S. economy is likely to slow down considerably in 2019. 

U.S. stocks have gotten hammered in November. We've already had the longest bull run in American history. Whispers of a recession are emerging from many people in financials services. 

But there are ways to keep a portfolio stable during hard times. 

Reduce Equity Exposure

"Lightening up on equity exposure if you're overweight equities," would be a solid move, Mike Loewengart, vice president of investment strategy at E*Trade said. "Adding high quality fixed income has traditionally been a great way to cope with volatility, provide some balance in your portfolio," he added.

Dividend Stocks 

That doesn't necessarily means piling into treasuries, which may be under some interest rate pressure as the Federal Reserve is poised to raise rates. Dividends can work very well. "High yielding equities have traditionally performed as low beta options for equity investors -- those can be a great choice for coping with volatility," Loewengart said. Plus, companies that aim to grow their dividend rates over time can provide especially solid income. "Dividend growers, they've historically displayed lots of strength in the face of volatility," he said. Exxon Mobil Corporation (XOM) - Get Free Report has a premium dividend to most companies, offering 4.22%. Consolidated Edison Inc. (ED) - Get Free Report offers 3.71%. 

Time For Financials?

Banks and financials have gotten hit hard of late. Morgan Stanley (MS) - Get Free Report is down 17% this year. Citigroup Inc (C) - Get Free Report is down almost 15% this year. But rising rates are usually good for the sector. "As interest rates rise and the yield curve potentially steepening, that should be a highly conducive environment for bank stocks and other financial stocks," Loewengart said. He did remind that loan volumes could be a concern as rates rise, but history does say that rising rates help banks and financials. 

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