In the darkness of current events we all need to retrench, reevaluate, and rethink our strategies (the three “rs” of survival). At the same time we need to start a methodical program for building a watch list of securities to invest in. If the financial signals are any indication, the market has already reached a bottom and now is the time to stick our toes back in the water. Certainly there are hundreds of bargain investments that should pay handsomely in the future. Of course it’s the timing that is critical, and that’s a tough one for any investor. But the possibilities lay right before our eyes and we must be ready when the starting gun fires.

Here is an unusual approach toward establishing a base for our investments. It involves hedging expenses. The shortened definition of “hedge” given by Webster’s Dictionary will do: A hedge is protection against loss. Several of your investments can hedge, or compensate, for your monthly expenses. For example, most people need banking services, but you can choose those few banks that will actually pay you in order to have your accounts. You can also buy stocks in the banks you trust, thus getting a double benefit. Similar hedges will work for the foods you eat, the clothes you wear, and the gasoline you use. Again, it is a matter of knowing what your true needs are and then investing according to these needs.

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Almost daily the Wall Street Journal [WSJ] publishes the performance of the top 15 yield-producing ETFs. They are listed under the title of Ways to Invest for Yield. The data reproduced here are from the January 29, 2008 issue. The key data are yield, price, and 1-day change. The yields are particularly high for ETFs, suggesting that these ETFs are good investments. But, are they? Can we read too much into the lucrative yields?

Utilities have a history of good dividend returns and safety. It is not true, as some people claim, that utilities are immune from downturns in a sinking market, but they are less likely to fall precipitously under adverse economic conditions.

Surprisingly, public utilities offer value, profit, and reliability when the market is at its worse. Roger Conrad’s Utility Forecaster of January, 2008 (www.utilityforecaster.com) presents an extensive menu of high-yield utilities. He says, in their favor: “Utility stocks haven’t gone straight to the moon in five years. But they’ve come pretty close: The index of 20 electric utilities traded on the Philadelphia Stock Exchange tripled from late-2002 lows and are 50 percent above their 2000 peak.” Many, in fact, are trading at their 52-week highs.