Go Big
by Charles B. Carlson, CFA
Dow Theory Forecasts

In a market in which investors are especially skittish, a good rule of investing is to "go big."

What that means is that investors may want to preference larger companies when taking positions.

One reason to "go big" during volatile markets is that investors who put money into the market during dicey periods want the ability to get out of the market quickly.

In general, large-cap stocks have the type of liquidity that makes it easier to buy and sell the stocks without dramatically affecting the stock price. Small-company stocks, however, may be more difficult to exit during volatile markets.

The upshot is that investors who put their toes back into this crazy market will likely do so in big, highly liquid blue chips.

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