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Playing a Market Implosion

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    InvestorPlace.com editor Jeff Reeves argues now is the time to protect your portfolio.

  • Duration 6:03
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So high unemployment slowing economic growth some weak third quarter earnings all of this casting a dark shadow over the years market rally.

Risks of the bear market have some investors pulling out of stocks and pretty much sticking their profits but we've got somebody who says do not -- screaming just yet.

He's got three ways.

To play a market implosion and shield your portfolio joining us now Jeff -- investor plays dot com editor you always come up with interesting story ideas and we wanted to bring you want.

Because there are people who feel and many of them out there are very concerned about -- very cloudy outlook.

So you say there are three different ways to actually keep the powder dry and hide -- a little money decades.

How do you.

But we're gonna have a market implosion what would get us there.

Why would necessarily -- on the market implosion and -- -- think that the fundamentals of the economy to borrow a political phrase on debate day is that.

There a lot better than they were you know four years ago there are still troubles I mean I have to rattle off the list China slowdown this year -- there's a fiscal cliff.

And everybody knows the score so I think.

The 50% rally here today in the markets -- -- a little bit of -- contraction lately I think it's it's people little worried they're tempering their enthusiasm so.

I think it's just prudent to be responsible long term I mean -- bullish in the long term but I mean I don't advocate ever timing the market.

So if you wanna get defensive in the near term this is a good way to kinda protect your money but so get in -- for for growth if there is the potential for a -- I was so a couple of bricks might start falling from this wall of worry and we say bricks falling because it's really been built up as the markets have done quite well held up very resilient today's the perfect example where we fought back.

The hundred point deficit in the last hour to simply move to the upside here for the Dow Jones industrials S&P M NASDAQ looked better but let's talk about.

Three places you feel are appropriate to hide the cash for the time being if you do want to get defensive.

Yeah Iraq quality guys I talk a lot about health care stocks and I think everyone -- have an overweight position health care in their portfolio just because.

It's very stable defense ministry look at the baby boom.

I mean it is these people get older they need more care it's human nature you major body breaks down people get sick there's -- -- and it's very it's a very growing sector of the market's good place to put your money too -- -- that I like right now are Eli Lilly and Merck -- just came up with a potential alzheimer's treatment which is shown a lot of potential earlier this year -- in trials.

And Merck has a brittle bone drug these are both really good baby boomer investment type of a plays.

And if you don't like to play individual objects like these I like both of those stocks that -- but there -- decent your day with decent dividends.

But you don't like the individual health care picks like that there are ways to play with funds I like the IYH iShares ETF it's got these big pharma stocks -- -- and also.

The -- UNH it's got economical device companies like intuitive surgical so you -- -- -- -- -- -- health -- you can do the fund route but I like Eli Lilly and Merck among object.

-- what -- -- but fascinating -- these are good boomer place you know all pharmaceutical companies have different skews some of them are very broad base but to look at those two and say they play on an aging population.

That is now living a lot longer so those -- the two names you like there.

We also showed consumer names and and there's some concern that consumer names might get hurt but again everybody's still eats and drinks to -- Yeah exactly these these -- necessities not luxuries I mean.

Even if we do see a downturn if there is another double that for whatever you wanna -- I -- -- out about the morning -- your kids in diapers you practice I mean.

You use shampoo as I mean I I really need shampoo -- -- budget pretty well.

But having everybody at this article Staples I Mena these are things that we use every day that I had everybody's main lining Diet Coke around here that's for sure -- yet and that -- companies that I really like our General Mills and Coke right now because.

While there is stability and these consumer plays baseline demand -- got to continue to some of these companies are very -- -- it actually seen outsize growth.

General Mills and -- -- both up 30% the last five years.

-- -- 50% when you put the dividends and they're both have a roughly 3%.

3% dividend -- so it's not like you can't get growth in these stocks -- percent annualized return both of these stocks when include the dividend.

It's pretty impressive so I like them to make out like the iShares -- for health care there's despite that I like for this consumer Staples play it's got its -- LP is the consumer Staples ETF.

It's got a bunch of other stocks if you want a basket including retailers like Wal-Mart these other these other core plays that consumers go out they're not discretionary expenses with -- Right -- this is a way to actually sort of get a whole panoply of names under one roof so to speak I love the title of your next thing and that is almost cash investments.

Despite an almost cash investment.

Well I mean you know putting cash in your mattress I don't know I think is a wise idea -- I guess some -- or turn in their buddies that's -- what high yield savings accounts -- got 1%.

I mean get out of town that's not let's not worth my money.

So what you wanna do you -- have an investment that's almost as safe as cash but gives you at least a decent -- -- returns he can keep up with inflation so.

One good investment that I think that we should maybe look at is corporate bonds the corporate bond market right now you get yields -- -- 45%.

That's a huge amount but it's a lot better than getting in treasuries a lot better than you gonna -- CD's so I recommend investment grade bonds and there's a corporate.

Bond fund from -- is only investment grade bonds.

The ticker symbol is Al -- you to -- and it here.

Beautiful chart here and this looks yet -- -- in -- the reason that you see those returns is because these are names that people trust there's Wal-Mart and there there's jet that there's General Electric there's -- And like the other announcement that I like if you just want cash for you -- worry about inflation is not -- worry about inflation the Central Bank policy.

I you can always go the tips throughout those are treasury inflation protected securities -- -- tagged.

To the Consumer Price Index they go up as inflation goes up to so you're not gonna get huge returns in those unless of course -- -- double digit inflation and frankly you don't want that.

But this is great way to maintain your purchasing power again that the fund that I like is V chip is the ticker symbol for that one it short term securities five year maturity allowed us.

But again if you think there's going to be inflation just want to maintain purchasing power to serve -- rated.

That good to see you Jeff thank you so much.

Protecting your money against any kind of market stumble or implosion because we because we show the imploding building so we're gonna -- implosion of anticipated Jeff thank you.

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