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EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Beware Not-So-Safe Havens

XLU's PE-to-growth multiple -- a metric used to gauge how expensive future earnings are -- is close to 4x right now. The same metric for the broad market is just above 1x, indicating a huge premium baked into utilities. A sector with long-term earnings growth expected to come in at around 3% isn't worth the huge multiple being afforded to XLU. This ETF has thrived thanks to major interest in lowering volatility, but it hasn't earned the appreciation through commensurate earnings growth. The unearned premium will ultimately deflate, which makes utilities ETFs such as XLU a dangerous place to seek shelter now.

If you're fed up with the volatility and would prefer to wait until the European debt drama subsides, it makes more sense to pull risk off the table completely. Don't be tempted by the historical appeal of gold, or the perceived stability of utilities. Climb into cash with a zero risk fund such as PIMCO's MINT or State Street's BIL. In the current environment, gold and utilities are flawed options that could serve to only deepen your losses.

Michael Johnston is the senior analyst and founder of ETF Database, a Web-based investment resource providing actionable ETF investment ideas and an ETF Screener for investors analyzing potential ETF investments. Johnston oversees ETF Database's free ETF Newsletter, one of the most popular sources for news and commentary focusing exclusively on the exchange-traded fund industry. Johnston also maintains and develops content for ETFdb Pro, a line of analyst reports and model portfolios designed to help investors utilize ETFs to meet their investment goals.

Johnston has completed the Chartered Financial Analyst (CFA) program, and obtained his bachelor's degree in finance from the University of Notre Dame. Prior to founding ETF Database, Michael worked in a private client service group performing valuations of companies operating in a wide range of industries.

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