Just about the only thing certain about this market is that the outlook remains uncertain, asserts growth and income specialist Mike Larson, editor of the industry-leading advisory service, Safe Money Report.
Just over a month ago, investors acted like they were swept up in despair. They were selling stocks with gusto and buying up all the Treasury bonds they could.
More recently, they’ve been positively euphoric. They’re buying stocks left and right and unloading the same bonds they couldn’t get enough of in August.
Step back a bit further, and you’ll see the picture gets even cloudier. The S&P 500 has swung wildly up and down several times since January 2018. But it’s basically unchanged from where it traded back then — 20 long months ago (and counting).
Fortunately, select sectors, stocks, and asset classes are not sitting still. They’re powering ahead — leaving properly positioned investors with sizable profits in their portfolios. I call them “Safe Money” investments, and I strongly believe they’ll keep prospering for the remainder of 2019 and beyond.
So, what are they?
1) U.S. Treasuries or ETFs and mutual funds that hold them on your behalf — Treasuries don’t get a lot of play in the media. Pundits would rather talk about the latest money-losing tech IPO because that boosts TV ratings and website traffic.
But guess what? Plain-vanilla Treasury bonds are blowing stocks out of the water! They’ve returned much more than equities in the last 12-18 months amid rising concern about recession in 2020 and a brutal slowdown in earnings and sales growth.
Other bonds with higher credit risks don’t look attractive to me. That’s particularly true for many corporate bonds. But give me Treasuries – particularly those in the middle part of the curve (say, 3-10 years) – all day long! One of the best ways to play this trend is via the ProShares Ultra 7-10 Year Treasury (UST).
2) Gold, silver and precious metals miners – I’m not a traditional gold bug. There are times I love the metal, times I hate it, and times I just don’t pay much attention to it.
But I started getting very bullish on precious metals last summer, and it looks like a powerful new move to the upside is underway. That makes both metals and mining shares ... which largely sat out the market rally over the past six years ... extremely attractive.
I particularly like the gold and silver “streaming” companies. They don’t operate mines themselves. Instead, they provide exploration and production financing to mining companies in exchange for cash flow “streams,” or royalties, based on the output of those mines. Wheaton Precious Metals (WPM) is a personal favorite.
3) Defensive, dividend-focused, anti-recession stocks – I’m talking about utilities, Real Estate Investment Trusts (REITs), and consumer staples stocks.
They may not look exciting. They may not sound sexy. But because demand for their products tends to hold up well even in a weakening or recessionary economy, they outperform at this stage in the cycle.
Plus, they feature generous dividends and lower volatility. Those are two more attractive attributes in tougher market environments. NextEra Energy (NEE) is a great sector play.
I’ll be sharing more details on these and other favorite investments from these various categories at The MoneyShow Philadelphia. It runs from September 26-28 and I hope to see you there.
In the meantime, never forget what legendary University of Alabama coach Bear Bryant said decades ago: “Defense wins championships.” He may have been talking about football. But his advice applies to today’s market, too. This is no time for taking aggressive risks. It’s a time to hunker down and focus on defensive investments.
