For undervalued asset classes to invest in, the suggestions of a panel of experts in Bloomberg's Where to Invest $10,000 Right Now in late June are still pertinent today. They highlight the strategy of targeting underperforming asset classes ripe to return to their historic levels, including emerging-market value stocks. The move back toward a historic norm seems to have started already, though, so emerging-market index funds and exchange-traded funds aren't as cheap as they were a few months ago.
Stovall sees a way to cope with volatility beyond grimly powering through it, or venturing into unloved asset classes. His research found that if you separate stock market performance from 1990 until now into six-month chunks, from May to October, and from November to April, you find that the market was up 1.5 percent on average from May to October but up 7 percent from November to April. Two sectors bucked the May-to-October trend: consumer staples and health care.
"When the going gets tough, the tough go out eating, smoking, and drinking, and then they have to go to the doctor," said Stovall.
You can play that seasonal pattern by owning the S&P 500 Index ETF (SPY) from November to April, but at the end of April moving half the money into a consumer staples ETF and half into a health care ETF. At the end of October, move back into SPY. Rinse and repeat.
"You'd have added almost 400 basis points [4 percentage points] a year to your portfolio return while reducing volatility," he said, and the strategy works across market-cap size and across regions.
Another seasonal strategy: Slather on some more sun screen, curl your toes in the sand and get lost in a good book.