Editors' pick: Originally published Jan. 20.
Need a safe place to invest when it seems like there's danger everywhere? We've got you covered.
Any way you look at it, the stock market has had a rough start to 2016. From uncertainty in China to plummeting oil prices throughout the world, the S&P 500 is down 9% this year with no end in sight. Even recent positive news about the U.S. employment rate isn't enough to stop the losses.
One sector that seems to be weathering the volatility somewhat well is technology. Tech stocks have seen the biggest decline in volatility since August's drop in the market, as judged by the Chicago Board Options Exchange Volatility Index (VIX).
"Tech stocks are well away from their August VIX peaks -- 38% lower -- and consumer staples -- 37% -- aren't far behind. The latter sector's risk pricing makes sense -- it has outperformed the broad market year to date. Technology, however, hasn't managed the same trick. That means tech companies are the last line of defense against the broader market setting new lows," said Nicholas Colas, chief market strategist at Convergex.
Of course, no industry is completely safe from the recent market declines, and tech stocks haven't exactly been a winner. Well-known companies like Facebook and Apple are both down by double digits on the year. And their losses are less than Amazon and Cisco, which are both down 15% so far in 2016.
However, there are some stocks that are holding relatively steady in these turbulent times. Here's a list of stocks you should be able to depend on when things get volatile.
EMC Corp. (EMC)
EMC provides data storage, cybersecurity, cloud computing and other services to businesses. Although the company had a relatively flat 2015 in terms of share price, it's weathering the storm better than most tech companies. Shares are down only 5% on the year, with the company's fourth quarter 2015 earnings being released on Jan. 27. Last quarter, the company's earnings came in as expected and another solid quarter would bring some welcome consistency to investors.
Oracle, a hardware and software company based in California, had a down 2015 as it continued its transition to cloud-based computing. This has been a challenge for many companies, particularly IBM, which is a leading server company. While the challenges are far from over for Oracle, 2016 has only brought share prices down 7%.
In times of volatility, it's usually the boring blue chips that are the safest bets. Although Microsoft's share prices are down 8% on the year, that's still far less than many of the other tech blue chips out there. The big problem facing Microsoft is a worldwide decline in PC sales and the company's underperforming mobile devices. Despite those challenges, Microsoft is on impeccable financial footing and offers a healthy 2.8% dividend.
This maker of touchpads, mouses and other computer devices is one of those rare companies with a share price that's up in 2016. Last year, Synaptics rejected a bid to be bought out for $110 a share. With the share price at around $60, reports surfaced that the buyer is back and talks are progressing. Out of all the previous stocks mentioned, Synaptics is probably the most volatile as the company is currently buoyed by sales reports that boosted the stock by more than 20% this week.
Struggling to Find Gains
On the year, a meager 18 companies on the S&P 500 have seen their shares prices increase, and most of these were energy companies with hefty dividends. Almost half of these 18 winners saw their shares rise by a percentage point or less. With such widespread declines, it's hard to find winners. How long this trend will continue is unknown, but at the moment it seems like the best thing to do is stay somewhat conservative.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.