The Latin term “Quo Vadis” means: Where are we going? The phrase served as the title of a best-selling book and later a blockbuster movie about ancient Rome and early Christianity.

As I survey coronavirus-induced economic damage, that Latin phrase has been ringing in my head lately. I posed the question to Robert Rapier, one of the stars on our investment team.

Robert [pictured] is chief investment strategist of Utility Forecaster. He’s also an energy expert and frequent contributor to our flagship publication, Personal Finance.

A prolific writer, Robert’s articles have appeared in Forbes, The Wall Street Journal, The Washington Post and The Christian Science Monitor. He also has been a featured expert on 60 Minutes and The History Channel.

As the third quarter gets underway, let’s see what Robert has to say about where we are going.

Projected corporate earnings for the rest of the year are dismal and the economy is in a recession. Why, then, has the stock market rallied?

I think the market has underestimated the economic impact of COVID-19 and has anticipated that we will quickly bounce back. Unfortunately, I think the Q2 rally was premature.

The market is pricing in a strong return to normal, even as COVID-19 cases in the U.S. climb to the highest levels yet. The pandemic’s spread is affecting consumer behavior and will ultimately weigh on the stock market.

How much of the rally can be attributed to Federal Reserve stimulus? Isn’t the Fed inflating an asset bubble?

You know what they say, “Don’t fight the Fed.” Certainly the stimulus gets a lot of credit for dumping money into the economy. And yes, the central bank is inflating an asset bubble. We are simply pushing the bills until a later date. But they will come due.

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The Fed has been buying the bonds of indebted companies, but much of this debt is toxic. If the economy doesn’t strongly recover, we could face a cascade of debt defaults that tanks the stock market.

Amid these risky conditions, investors should disaster-proof their portfolios to the greatest extent possible. With that goal in mind, which sectors currently provide a prudent mix of growth and safety?

Historically in times like these, three sectors stand tall: utilities, consumer staples, and real estate. But many of the high-profile real estate investment trusts, or REITs, have gotten clobbered due to stay-at-home orders.

Utilities also lagged behind in the Q2 rally, whereas consumer staples was resilient. Regardless, I expect to see these three sectors perform well in what I believe will be choppy waters ahead.

I’m particularly keen right now on consumer staples. The consumer staples sector consists of companies that are involved in the development and production of consumer products that cover food and drug retailing, beverages, food products, tobacco, household products, and personal products. These are the essential products that we can’t do without, even when times are tough.

From its March 23 low to July, the market has staged a remarkable rally. Do you think we face a correction later this year?

Almost certainly. Unless some miracle happens on the COVID-19 front, a lot of people won’t travel, they won’t go to restaurants, and they won’t spend time in stores. That’s going to be a drag on the economy that will ultimately show up in the stock market. I think there is a lot of downside risk at this point in the market.

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Consider the situation with dividend stocks. Scores of companies this year have cut or suspended dividends. I will go out on a limb and say that this year will be worse in terms of dividend cuts than either of the Great Recession years of 2008 and 2009.

You’ve often warned investors against trying to time the market. Why does market timing usually end in tears?

Because people clip their returns on both ends. They only sell after a correction has begun, and they only buy back after the market starts to rally. This year, we have witnessed two major market moves, neither of which were predictable beforehand. The first was the deep March dive that turned out to be the fastest correction on record.

If you were attempting to time the market, when would you have sold your stocks? Yes, there were concerns leading up to the correction about the potential impact of COVID-19 on the economy, but it’s always unpredictable when the impact will start, how severe it will be, and how long it will last.

The second major move happened after the market bottomed in March. We were heading into a recession and a second quarter that by all accounts will be one of the worst of our lifetimes. Much of the U.S. was quarantined at home, the unemployment rate was skyrocketing, and the economic outlook was bleak. But the S&P 500 embarked upon the greatest 50-day rally in its history.

Few people saw that coming. The moves represented a major disconnect between the stock market and the underlying economic fundamentals. Logic dictated further market declines. But the federal government injected a huge amount of money into the market and that helped boost spending. More importantly, it spurred optimism.

Even market gurus like Warren Buffett agree that market timing simply doesn’t work over the long haul.

Fundamentals eventually win out. In the short term, emotions and psychology can usurp fundamentals. This is why I kept urging people not to panic during the March sell-off. Companies that are fundamentally sound experienced huge emotional selloffs. Most of those companies have now recovered the bulk of their losses.

You’re one of the country’s foremost experts on energy. It’s difficult to predict the future of oil prices, but generally speaking, how do you see crude oil prices performing for the next few months?

I think we have a lot of headwinds until demand fully recovers, and we may be a year or more away from that. At the beginning of the year, I did not think we would go below $50 per barrel in 2020. Now, after the pandemic has crushed global demand, I will be surprised if we see $50 again this year.

It’s also an election year. Those tend to inject additional unpredictability into the markets, as short-term decisions are often made to influence voters, e.g., releasing oil from the Strategic Petroleum Reserve to drive gasoline prices lower.

Against today’s uncertain backdrop, it’s harder for anyone to get a clear handle on trends in the energy markets.

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John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com.