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Posted on 17 March 2013 | 1,362 views

Positioning Your Portfolio for the Next Stock Market Crash

Recently there have been a wide variety of reports and opinions regarding where the stock market is heading next. Some analysts have predicted a severe market crash worse than the one that occurred during the Great Recession and others have predicted a completely opposite scenario resulting in a continued bull market that will take the Dow Jones Industrial Average (Dow) to over 20,000.

Historically, there have been countless recessions and market crashes in the U.S. A prime example is the market crash during the recent Great Recession which resulted in the Dow dropping from its all time high of over 14,000 to below 6,500.

Positioning Your Portfolio for the Next Stock Market Crash

When will the next market crash happen? The truth is nobody knows but you need to manage your portfolio appropriately in anticipation of future market crashes.

1.) Allocate a portion of your portfolio to companies that provide products and/or services that consumers will need regardless of the state of the economy.

2.) Invest in these companies regularly over time (such as monthly) regardless of whether the market is up or down.

3.) Reinvest the dividends. By reinvesting your dividends, you will automatically be purchasing shares at rock-bottom prices during market crashes.

The following two companies are favorites for long term investment opportunities and will help you to position your portfolio for good times as well as the next market crash.

Johnson & Johnson (Ticker Symbol: JNJ) is the most diverse healthcare company in the world. Johnson & Johnson’s business segments include pharmaceuticals, medical devices and consumer products.

Johnson & Johnson’s dividend history has been excellent and includes 50 consecutive years of dividend increases. Its current dividend yield is 3.1% and its annual dividend has been multiplied 2.81 times over the last decade, from $0.80/share to $2.25/share.

3M (Ticker Symbol: MMM) is an innovative manufacturer of a wide variety of products. 3M is divided into six operating segments: Industrial and Transportation, Healthcare, Consumer and Office, Safety and Security, Display and Graphics, and Electronics and Communications.

3M’s dividend history has been excellent and includes 55 consecutive years of dividend increases. 3M’s current dividend yield is 2.4% and its annual dividend has been multiplied 1.79 times over the last decade, from $1.32/share to $2.36/share.

Positioning Your Portfolio for the Next Stock Market Crash

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