This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Summer Flight-to-Quality Stocks

BALTIMORE ( Stockpickr) -- The trend toward increasing volatility continues to be on the rise for stocks. Since the beginning of May, the VIX, which tracks the implied volatility of the S&P 500 index, has rocketed more than 71% as investors have run from risky stocks in favor of safe alternatives such as money market funds and gold -- a move known as a "flight to quality." But as market participants flee volatile investments, they run the risk of getting into positions that are less than ideal.

With so many different options available for investors looking to limit their portfolio risk, it's no surprise that even unattractive trades are being made for the sake of being "safe." But that doesn't have to happen to you.

Before we take a look at which flight-to-quality investments are attractive right now, we need to take a closer look at the reasons behind putting your money into one of these instruments -- risk reduction isn't the whole story. In 2008, as stocks tumbled significantly, most Wall Street brain trusts predicted that the dollar would fall in kind. It didn't. Instead, it rallied hard in response.

The reason was the flight to quality itself. With scores of investors piling into flight-to-quality investments such as treasuries, the dollar's rise was an unintended consequence. Whenever Wall Street moves to a particular kind of investment en masse, serious short-term gains can ensue for the investors who got in early.

If you're serious about avoiding risk, though, don't even think about stocks. Even the most solid blue chips are highly susceptible to the market's ebb and flow. If you're going to reallocate your portfolio, you might as well do it right.

Without further ado, here's a look at the best flight to quality plays for the summer of 2010.

Gold has long been a favorite play for tough times -- no surprise to most investors. Gold is a hard asset that you can actually take physical delivery of (if you're so inclined), and that's something that investors of all experience levels can relate to. Gold ETFs, such as the SPDR Gold Trust (GLD), have become popular options for people who want exposure to the yellow stuff without having to deal with the intricacies of actually buying bullion.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • 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 Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs