Some industries are cyclical, with big booms and busts. Other industries tend to be steadier. Which wins out over time? It depends on whether you get in at a good price – or wait to jump in once a trade idea has already gotten hot.
Investors can trade while also using bear markets to build up positions in steady players. This helps take advantage of the market’s long-term returns, without being beholden to short-term trades succeeding 100 percent of the time.
One of the top places to invest with the long-term in mind is the insurance industry. It’s a sector that usually doesn’t lead the market. But it tends to perform well over time.
One of the biggest players in the property and casualty insurance space, Chubb (CB), is a leader in covering more valuable residential properties in the U.S. That positioning is more recession-resistant than insuring lower-income homes, which may cut back along with the economy.
Action to take: Shares are flat over the past year, even as revenues have risen by 14 percent. The company is also a solid dividend-growth player, with a 1.6 percent starting yield right now. This is one insurer that could fare well for long-term buyers today.
For traders, shares have been trending higher since October, but have pulled back in recent weeks. The uptrend looks likely to resume. The August $230 calls, last going for about $4.25, offer mid-double-digit returns in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.