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Mon Dec 10, 2018, 12:10 PM

What the smart money is buying as the market tanks [View all]


New York (CNN Business)The Dow and S&P 500 are now both in the red for 2018, and investors have few places to hide as the stock market tanks. But savvy people are finding some pockets of safety.

Gold, an investment that often shines during times of financial stress, is up nearly 4% so far in the fourth quarter while the S&P 500 and Dow have both plunged nearly 10% and the Nasdaq has plummeted almost 13%. The rise in gold prices has been good news for miners too. Newmont (NEM), which is in the S&P 500, is up nearly 10% since the end of September. The VanEck Vectors Gold Miners ETF (GDX) has gained about 7%.

Utility stocks and real estate investment trusts, which both pay hefty dividends, have held up well too. The Dow Jones Utilities Average has gained more than 3.5%. The SPDR Dow Jones REIT ETF is up more than 1%. "Owning exciting things was more fun and profitable than owning good things," said Jon Cheigh, portfolio manager of global real estate with Cohen & Steers. "But high momentum stocks have started to come under pressure and real estate valuations are finally starting to look more attractive."
Yield plays in focus

Another clear sign investors are craving anything that can guarantee them a bit of a return: Investors keep rushing into bonds, despite the yield on the 10-Year Treasury falling to just 2.85%. The iShares 20+ Year Treasury Bond ETF (TLT) has gained nearly 2.5% this year.

Neil Dwane, managing director of Allianz Global Investors, said these more conservative investments might be coming into favor now because investors are realizing that growth in the US this year might be as good as it gets for awhile.

Personally, I don't trust gold but the rest of the advice is good: dividends, bonds, utilities, food, conservative investments are the way to go as we watch Trump destroy our economy. Don't worry, Trump's buddies are getting rich off this volatility but the rest of us don't have to get eaten for lunch.

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