2006-11-21 03:03:41 · 5 answers · asked by artguy90291 2 in Business & Finance ➔ Investing
When the Dow is rising, stocks with high betas do very well in general. When the Dow is falling, stocks with negative betas do well and t-bills as people flee the market. Also the screw ball Rydex funds RYIDX which attempts to perform at a 200% invervse relation to the Dow average and the RYVTX which attempts to perform at a 200% inverse relation to the Nasdaq 100.
2006-11-21 07:08:54 · answer #1 · answered by Anonymous · 1⤊ 0⤋
The DOW is composed of large cap blue chips. That said, the DOW is pretty well diversified across sectors, and so tends to be representative of the market as a whole. When the DOW is down, generally the market is down or at least flat. There's no sector which predictably moves in opposition to the DOW.
You need to diversify with small/mid caps, REITS, bonds, and foreign stocks. All of these sectors are weakly correlated to the Dow. They sometimes, but not always, move in opposition to the DOW.
2006-11-21 05:23:59 · answer #2 · answered by Yardbird 5 · 0⤊ 0⤋
When the stock market is doing well, the companies that do well are the industrial companies (think smokestacks) like Caterpillar, Deere, Freeport-McMoran, and Dow Chemical. Also, when the economy does well small-caps can offer higher returns. When the economy isn't doing well, people usually run to the blue-chips (the companies everyone knows like General Electric and other Dow Components) and in particular the sector that does the best are consumer staples. These are food and medicine stocks like CVS, Safeway, Pepsico, Pfizer, Johnson and Johnson, etc. The reason that these stocks do well in a down stock market is because their earnings are not effected by the economy's ups and downs because people are going to eat and are going to keep their medicine whether the economy is doing great or poorly.
2006-11-21 04:07:35 · answer #3 · answered by jthomas1279 2 · 0⤊ 0⤋
Generally, when the Dow (large sized mostly industrial stocks) is down, bonds do better. When the Dow is up, obviously the large sized companies in the ndustrial sector is doing well.
2006-11-21 03:33:21 · answer #4 · answered by oakhill 6 · 0⤊ 0⤋
Many run to the Blue Chips and bond funds when the market turns sour.
2006-11-21 03:07:20 · answer #5 · answered by dundalk1 3 · 0⤊ 0⤋