Tom Aspray suggests that those not invested in stocks should look to one high-yielding sector, as well as two of its key stocks." />
In a market buffeted by global cross-currents and worries over the “fiscal cliff,” MoneyShow’s Tom Aspray suggests that those not invested in stocks should look to one high-yielding sector, as well as two of its key stocks.
Stocks closed mixed on Friday, suggesting a possible loss of short-term momentum, but a correction in stocks is likely to be an opportunity for those who are not already invested to buy.
Despite the impressive 16.4% gain so far this year in the Spyder Trust (SPY), the investing public continues to be skeptical (if not frightened) about entering the stock market. Data from Lipper suggests that $137 billion has been removed from stock mutual funds so far in 2012, with $267 billion moving into bond funds. Some of the money has also gone into ETFs, which had an inflow of $89 billion.
The reinvestment of dividends has also been supportive for the stock market. In August, S&P 500 companies paid out $34 billion in dividends. Many hedge funds apparently missed the start of the rally from the June lows, and individual investors are wondering if it is too late to buy now.
One of the stock market’s most defensive sectors typically bottoms in the middle of October. Last week’s technical action identified three specific ways to invest in today’s market.
Chart Analysis: The Select Sector SPDR Utilities (XLU) has assets over $6 billion, with a yield of 3.94% and an expense ratio of 0.19%. It peaked at $38.54 in July, and is currently trading 4.6% below its highs.
Southern Company (SO) is a $40 billion electric utility that currently yields 4.3%. It is a 8.9% holding in XLU. At the end of July, SO peaked at $48.59.
NEXT: Tom's Recommended Key Entry Levels