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Investors Strolling to Quality

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You occasionally hear the term “flight to quality,” in turbulent markets. Things aren’t (as of now) so bad that investors are fleeing, but they may be strolling to quality. The Dow Jones Industrial Average, America’s “blue chip” index, has been outperforming the S&P 500 and Nasdaq so far in 2022. You can see on my chart below that both the S&P 500 and Nasdaq are trailing the DJIA year-to-date.

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According to S&P Global, which owns the Dow Jones indices, to be considered for inclusion in the DJIA a company must have an excellent reputation, demonstrate sustained growth and be of interest to a large number of investors. Additionally, “Companies should be incorporated and headquartered in the U.S., and a plurality of revenues should be derived from the U.S.”

Those characteristics are much more stringent than those for the S&P 500 and Nasdaq composites. Investors favoring the DJIA over those indices during the sell-off are signaling that they value quality over other attributes.

Action Line: It’s times like these that remind investors of the value of quality companies and the value of an investment plan focused on blue-chip names with excellent reputations. If you need help building a plan that focuses on quality, let’s talk. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter, and you’ll learn more about me and how I help American families improve their personal and financial security.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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