- which stocks you should sell if we go over the fiscal cliff; and
- why gold will head higher in the coming year.
A Fiscal-Cliff Strategy Posted at 8:30 a.m. EDT on Friday, Dec. 28 Let's say all goes badly and we go over the cliff. What do you do? Given the mercurial nature of politics, you need a plan that embraces the short-selling or put buying of the segment that would miss numbers anyway, even if the cliff were resolved, so that if we get a blip up on a solution the group can be re-shorted into strength. That group is retail. My preferred way to execute this strategy is to sell short or buy puts on the Market Vectors Retail ETF ( RTH). Here's why: First, we know that somebody's going to get hurt: the poor, the middle class or the rich -- maybe all three. They will all react by saving more until the coast is clear. That's terrible for retail, all retail, but especially the dollar stores, which have acted terribly, and the discounters -- think Wal-Mart ( WMT) and Target ( TGT). Second, the weather was so bad, and the psyche so negative -- look at retail correlative Consumer Confidence -- that you can't own the strugglers: Best Buy ( BBY), Bed Bath & Beyond ( BBBY), Kohl's ( KSS) or even good ones like Ross Stores ( ROST). I would point out that Macy's ( M) fares badly in this world, too, with a heavy-coat segment that must be discounted. Finally, I would not trust even the strong home themes, at least for now, because they have run so much: Williams-Sonoma ( WSM), Lowe's ( LOW) and even one of my big faves, Pier 1 ( PIR). I would be quick to cover this cohort, though, simply because it is part of a larger theme that will be hard to dislodge -- the higher price of homes. All of these would be short-term plays. And if you are worried, I would go long Costco ( COST) as a hedge because I believe it is the default play for shoppers.