3 Bear Market Safe Havens: GLD, TLT, XLU

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Stocks returned from Super Bowl weekend with an epic hangover.

3 Bear Market Safe Havens: GLD, TLT, XLU

Source: ©iStock.com/blewisphotography

U.S. indexes across the board gapped lower, destroying pretty much any gains scored during last week’s rebound in one fell swoop.

Those wishing for a swift end to our newfound bear market shouldn’t get their hopes up. Given the amount of technical damage inflicted over the past few months, this is likely to be a long, drawn-out affair with many a misstep.

While the Nervous Nellies among us may be sorely tempted to park themselves in cash, the greenback isn’t the only asset offering safe harbor. A number of other investments with a penchant for outperformance during downturns are worth consideration as well.

Here are three bear-market safe-havens beckoning to investors one and all.

3 Bear Market Safe Havens: SPDR Gold Trust (GLD)

GLD

Source: OptionsAnalytix

Gold has long held a prominent position in the minds of risk-averse investors. Unfortunately, its performance over the past few years has been found wanting. The SPDR Gold Trust (ETF) (GLD) — Wall Street’s go-to ETF for gold exposure — has been a serious disappointment to those hoping that one of the numerous boogeymen that has spooked investors in recent years would finally re-ignite the golden bull.

But, alas, each mild upturn in the shiny stuff was snuffed out in short order.

If recent signs are any indication, however, the tides may finally be turning for GLD. Its safe-haven status seems to be restored. To wit: since Dec.15, GLD is up about 13% while the S&P 500 is down more than 9%.

What’s more, with Monday’s moonshot, GLD is taking out a descending trendline that has stymied every advance for the past three years, on high volume to boot.

If you’ve held off on bullish GLD trades on account of its incessant slide, it’s time to take another look. The bulls have returned.

3 Bear Market Safe Havens: iShares Barclays 20+ Yr Treas.Bond (TLT)

TLT

Source: OptionsAnalytix

Our next bear-market safe-haven is an oldie, but a goodie: U.S. Treasury Bonds. Long-term treasuries, to be exact.

These mighty steeds never go out of style. When the world is burning and Chicken Little is clamoring, investors one and all pile headlong into the safest asset on the planet. The iShares Barclays 20+ Yr Treas.Bond (ETF) (TLT) is the de facto king of bond ETFs. TLT is as liquid as they come, with trading opportunities aplenty.

Since Dec. 15, TLT is up 8%. Keen observers will note each and every major stock downturn over the past two months has been accompanied by an equally impressive upturn in TLT. Monday was no exception, as the S&P 500’s 2% swoon was matched by a 2% rip in TLT.

The upward march in TLT will continue as long as our new bearish overlords rule in stock land. Consider any and all dips in TLT buyable events.

3 Bear Market Safe Havens: Utilities Select Sector SPDR ETF (XLU)

XLU

Source: OptionsAnalytixs

Rounding out our trio of safety is the Utilities Select Sector SPDR ETF (XLU). Utility companies boast one of the more recession-proof business models. When fear strikes, high-beta stocks are some of the hardest hit (see small caps and biotech performance of late).

In contrast, the boring, low-volatility behavior of utilities begins to look mighty attractive when most other sectors are getting slaughtered. The higher dividends paid out by XLU and its components also increase in appeal as demand for bonds drives down the already paltry yields offered from fixed income.

For example, XLU offers a dividend yield of 3.5%, compared to the current 10-year yield of 1.75%. The outperformance of XLU is undeniable. Since Dec. 15, the utilities sector is up an impressive 10% compared to the S&P 500’s 9% drubbing.

At the time of this writing Tyler had no positions in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/3-bear-market-safe-havens-gld-tlt-xlu/.

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