Bolling: Ride Defensive ETF Trades Until the Tide Turns
You may even be able to hear a collective sigh of relief by some investment bank CEOs who are torn between telling the Street exactly how much exposure they still have and hoping beyond hope that the market for their collateralized debt obligations (CDOs), credit default swaps (CDSs) and mortgage backed securities (MBSs) finds a bid before that day of reckoning.
The day will come when it is safe to dive back into the financials. The signal will be a clear one. Headlines will read something like this: 'Home Prices on the Rise'. Now, the tide for buying is rising. The cool thing is that there will be opportunities everywhere. Billions of investable dollars are sitting on the sidelines waiting for that same bell to ring. We will be able to buy highs and sell higher. It's a trend-traders utopia. The thing is, I think this 'safe to get back into the water' bell is approaching. However, I am not ready to jump in with both feet yet.
Until the horn sounds, I think a portion of your portfolio should remain defensive. I have talked about defensive ETFs in the past. My two favorites have been, and remain, the Consumer Staples Select Sector SPDR ETF (XLP), and the PowerShares International Dividend Achievers ETF (PID).
XLP is a solid play because people will continue to buy the basic necessities, such as toothpaste, toilet paper, and deodorant, even if their home values slide and they feel the nasty sting at the pump. With this play you get exposure to Procter & Gamble (PG), Wal-Mart (WMT), Altria Group (MO) and Coca Cola (KO).
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV