Are America's Investment Clubs Worried About the Economy?


The top stocks bought by investment clubs in June 2022 show a definite bias for and against certain sectors.

Each month, America's investment clubs buy and sell stocks for their club portfolios, and these transactions are tracked in the Investment Club Top 40. But digging deeper into the data, we can draw some conclusions about club members' outlook about the state of the U.S. economy.

Looking at the 100 most popular companies bought in June, we can see that all eleven major sectors of U.S. business were represented. However, when investors are feeling headwinds from economic trends such as inflation, unemployment, housing starts, or declining business revenues, they typically turn towards Defensive stocks, those in the Healthcare, Utilties, or Consumer Defensive sectors. In the month of June, only 18% of the top 100 stocks bought by clubs were in these Defensive sector companies.

On the other hand, 51% of June's company purchases were Sensitive Super Sector companies in the Technology, Industrials, Communication Services, and Energy sectors. The remaining 30% were in the Sensitive Super Sector industries of Real Estate, Financial Services, Consumer Cyclical, or Basic Materials.

Could it be that clubs are oblivious to the looming economic storm clouds? Or are they willing to wait out the downturn and are simply looking for bargains in the present environment? Perhaps their portfolios are already diversified with a healthy dose of Defensive stocks, so club members don't perceive the need to add more at the present time.

A well-diversified portfolio is one way that investors and investment clubs can build portfolios that generate more consistent returns. The Portfolio Reports help keep clubs easily able to manage their diversification by company size, super sector, sector, or industry.

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