Only the most bearish market analysts really expect us to get back to the March 2009 lows anytime soon. In the fourth quarter of 2008, U.S. GDP contracted by 6.3% -- the worst quarterly drop in more than two decades -- and by almost 6% again in the first quarter of 2009. Though we certainly have our troubles, there's not nearly the gloom and doom out there that was persistent on Wall Street back then. The economy is still squeaking out a bit of growth, after all. But does this mean that it's okay to sound the "all clear" for the stock market? Hardly. The fact is that while the economy is limping along, stocks are at best moving sideways with little appreciation. When you consider that a host of other investments are trouncing equities, it may make sense to sell off all your stocks and move your nest egg elsewhere rather than ride the roller coaster. Here are seven investments beating stocks right now -- and which may continue beating stocks going forward. Some are obvious, and some are a bit out there. But all have the potential to help you retire in style.
#1 - Gold
Goldbugs can get a bad rap because a handful of gold investors really are convinced the U.S. dollar will disappear as a solvent currency and that we'll all go back to bartering sheep. But it's hard to knock gold's performance, either in the last year or the last 10 years. The yellow stuff is up about 25% in the previous 12 months -- compared with less than 10% for the broader stock market. And gold prices were around a measly $300 an ounce a decade ago -- a quarter of current valuations -- whereas the stock market has actually seen a small loss during that time. Don't care for messing with heavy coins? Well even retail investors could have shared in much of this boom. The SPDR Gold Trust ETF ( GLD) launched in November 2004, and those first investors in this fund are sitting on a hefty 170% return if they haven't sold yet. The Dow , by comparison, is off about 2% in the same period.
#2 - A Self-Storage Business
There is always a bull market somewhere -- and if you haven't heard of the self-storage boom, it may be because the smart money is beating you to it. A recent Wall Street Journal article quoted the CEO of a California self-storage company now getting calls from institutional investors such as the State of Michigan Retirement System and Goldman Sachs. Why? Because if managed properly, a self storage business produces annual returns of 5% to 10% like clockwork. You buy a property, outfit it with locks and collect rent checks -- a landlord but without the hassle of fixing sinks and window latches for tenants. To top it off, you may also find some tax advantages to owning your own business and writing off expenses. There are risks, of course -- the least of which include active management to avoid high vacancy rates and prevent losses due to property damage and theft. Also, a self storage business is incredibly illiquid and may be difficult to get out from under when you're ready to retire. But done right, all you have to do is deliver the keys and pick up the monthly checks. Not a bad gig, and business is booming as a poor real estate market keeps many families in smaller lodgings without room for all the furnishings from their foreclosed homes.
#3 - Cash
You knew this was coming, so I'll be brief. The stock market is flat year-to-date, the 5-year return for the S&P 500 is down nearly 10%, and the 10-year return is down 27%. That in itself is enough to entice investors to move their cash from a brokerage account to their bank account. But here is a more compelling argument with an eye to the future: The specter of deflation is brought up a lot by the bears. If you truly believe in this scenario, then go to cash -- because it will appreciate just sitting under your mattress. Think of it this way: If prices drop 3% on cars, houses and other goods, you've just made 3% thanks to your increase in purchasing power. Add a trickle of a few percentage points in a CD, and you're not doing bad. After all, as Pimco icon Bill Gross said in July, "I think most asset classes are attractive but will only provide 4% to 5% returns going forward." And don't forget that unlike other investments, there are no fees to pay, and you can't beat the liquidity that cash provides. Of course if the opposite takes place -- inflation instead of deflation -- then you're in trouble.