The U.S. economy has shown remarkable resilience throughout the year, and the stock market has followed suit, largely shrugging off concerns about inflation, higher interest rates, and slowing growth. Despite a typical September swoon that affected stocks and the best ETFs, experts like Susan Kaplan, president of Kaplan Financial Services, remain confident that the market will continue to thrive.
Kaplan believes that market volatility is not a cause for panic but an opportunity for attractive investing options. She emphasizes that the biggest risk for the markets is emotional, as the average investor tends to be skittish. Kaplan cites historical examples like the dot-com bubble burst in 2000 and the financial sector implosion in 2008, where investors who panicked missed out on great buying opportunities. Over the years, Kaplan has learned that it pays to ride out market turbulence.
For investors looking to take advantage of turbulent times, Kaplan recommends buying companies that dominate their field at low prices due to the fears of fellow investors. With this in mind, she suggests three ETFs that focus on quality large-cap companies that should thrive as long as the economy continues to grow steadily.
Kaplan’s first pick among the best ETFs is the Invesco QQQ (QQQ), which tracks the Nasdaq 100 and includes major tech companies like Apple, Microsoft, Amazon.com, Nvidia, and Meta Platforms. Kaplan believes that tech is an essential part of any investment portfolio and notes that major tech stocks have justified their valuations with strong revenue and profits.
Her second ETF pick is the Pacer US Cash Cows 100 (COWZ), which screens the Russell 1000 for companies with the highest free cash flow yield. This ETF focuses on companies with ample cash reserves, allowing them to pay dividends, buy back stock, and pay down debt. Kaplan believes that owning these cash-rich firms will only enrich investors, especially given the dominant position of U.S. businesses in the global market.
Lastly, Kaplan recommends the Vanguard Consumer Discretionary fund (VCR), which takes advantage of the strong spending trends among U.S. consumers. She is not concerned about inflation and believes that earnings, spending, and wage increases have exceeded expectations this year, pointing to a robust economy. The VCR ETF has gained 23% year-to-date, with top holdings including Amazon, Tesla, McDonald’s, TJX, Home Depot, Lowe’s, Starbucks, and Nike.
In conclusion, while recent market declines may be unsettling, Kaplan advises investors to stay focused on their long-term investment strategy. Top growth stocks with solid cash flow will continue to pay off over time. The key is to remain calm during periods of volatility and take advantage of buying opportunities presented by market fears.