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It's a crash, all right, but in your run for safety, good luck finding a solvent government that...

  • Saturday, September 24, 2011, 8:15 AM ET
    It's a crash, all right, but in your run for safety, good luck finding a solvent government that will give you anything but a paltry yield. The answer, CSFB's Andrew Garthwaite says, is in the six safest stocks he knows - big, healthy, high-yielding companies with multinational income: Novartis (NVS), British American Tobacco (BTI), Intel (INTC), Vodafone (VOD), Coca-Cola (KO) and Microsoft (MSFT). (More Investing for Income)
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This news story has 21 comments:

  •  
    May I also add AAPL? If a recession comes it would only make Apple cheaper. At one point, this company had more cash in the bank than the US Treasury.
    24 Sep 2011, 08:57 AM Reply Like
  •  
    AAPL is a good company with good product. In case of margin calls and redemption no stock is safe. You can always buy at lower price.
    24 Sep 2011, 11:11 AM Reply Like
  •  
    ZD

    This is a story emphasizing income and relative safety - AAPL doesn't pay a dividend.

    Long term these stocks should do fine and If you can't be protected holding these stocks then we really do have a problem.
    24 Sep 2011, 11:39 AM Reply Like
  •  
    Interesting that UBS didn't look for someone lower on the totem pole to axe.
    24 Sep 2011, 10:20 AM Reply Like
  •  
    When a market is in liquidation, fundamentals do not matter. The market is entering a highly irrational phase where assets that are owned with the most leverage will go down just as hard as everything else regardless of fundamentals. Just look at some of the most overowned fundamentally solid stocks during Sep 08 through Mar 09. They didn't fare that well. At some point, fundamentals will matter, just not now.
    24 Sep 2011, 01:27 PM Reply Like
  •  
    Kaa,

    You are so right.

    Just look at what happened to CAT, one of the most fundamentally sound companies in the world - truly a company to admire.

    Dropped like a rock from over $82 to just over $23 in under a year in 2008/09. Did CAT's business really change that much?

    And now, peaked at $116 and now trading at around $74. Isn't it a bargain at this level?

    Surely it would appear so but man it could just keep on going down. Who knows?
    24 Sep 2011, 01:47 PM Reply Like
  •  
    I would own PM over BTI to be honest, because PM benefits from a weaker dollar. If you buy BTI you must hedge the pound exposure.
    24 Sep 2011, 01:38 PM Reply Like
  •  
    Why own stocks at all in this environment?
    24 Sep 2011, 01:57 PM Reply Like
  •  
    I own several high yielding stocks, some of which have already reduced their dividend, but interestingly, they didn't go down. The sole purpose of owning them is that the interest they generate every month pays my home equity line of credit. The price of the underlying issues hasn't changed that much since I bought them many months ago. There is an upside to every market and this seems to be one. With Bernanke assuring no change in interest rates until 2013, I'll take what I can get while the taking is good. So there's one answer to "why own stocks".
    25 Sep 2011, 10:06 AM Reply Like
  •  
    In the past several weeks almost all the experts have been recommending to reduce risk.

    If I reduce the risk profile of my portfolio, someone must be increasing the risk profile of his.

    So if I sell IEZ someone buys it. If I buy SO someone sells it.

    So my questions are: who is increasing risk (other than me) and why don't we ever hear from them?
    24 Sep 2011, 02:10 PM Reply Like
  •  
    Perhaps "they" <being the risk takers> prefer to shut their mouths about what they are doing.

    Personally, I don't get zealous about chit-chatting about any sort of risk because I'm not interested in the backlash babble of doom and gloom people telling me I am, evidently, "mentally inept and should have sold everything I own and fled from equities to the dollar..." This suggestion to unload my whole portfolio usually occurs on days like Thursday. "Sell all your assets TODAY agonizingly LOW for a gigantic LOSS & buy safety HIGH...RIGHT NOW."

    Yeah ok. You Doom-and-Gloom the apocalypse draws nigh people go ahead and do that. If I truly think all the stock market and the world are about to enter Zombie Apocolypse territory, I don't think a bunch of dollar bills are going to save me from imminent financial demise, anyway.... I'd rather stockpile guns, canned food, and a lot of whiskey and xanax.

    Personally, I prefer to follow my personal game plan, and make minor adjustments to my portfolios when it seems appealing ...

    Not saying defensive is bad... I'm not opposed to some defensive puts, and a few large cap dividend yielders, because the prospect of divi reinvestment during a <potential> bear market, once again, appeals to me...

    Still, I try not to stray from my usual methodology during times of chaos and volatility.

    Attempting to alter your entire investing modus operandi in the middle of mayhem just doesn't seem like an overwhelmingly smart way to go.
    24 Sep 2011, 07:29 PM Reply Like
  •  
    good point-being a contrarian means one has to absorb the laughter and ridicule of the masses. sometimes it's easier to lurk in the bushes.
    25 Sep 2011, 10:19 AM Reply Like
  •  
    It seems to me that if you buy a stock now that is obviously undervalued like JKS for example then all you have to do is wait, however many months or years it takes to make a profit.
    24 Sep 2011, 02:31 PM Reply Like
  •  
    Jesus!
    Classic mis direction!
    There are no safe stocks, what, you think they can't go down in a depression?
    You think they wont slash their dividends?
    Man, you really have learned not a fracking thing from just four short years ago!
    Listen to this idiot, you will get what you deserve.
    There's an old saying, "Lie down with dogs, you get fleas", or fleeced!
    Jerry
    24 Sep 2011, 02:36 PM Reply Like
  •  
    I don't think you ever know for sure what the future brings. We all know that there will be a big crash eventually simply because of the debt based monetary system/ fractional reserve lending and a vain government that has only 4 years in sight, after that who cares, all of that we are in the fleabed with, but this crash could come next week or in 5 years. All that needs to happen is the debtceiling gets raised and the EU makes some sort of decision that will keep the news from printing new horror stories and everything is delayed again.
    How long do you think an average investment junkie is able to sit on the sidelines with cash in hand?
    24 Sep 2011, 02:49 PM Reply Like
  •  
    Why does SA attract so many who scream that the end is near as soon as the market drops a few points?

    If you have a balanced portfolio, no need to worry. Unless the market tanks completely, not much is gonna happen. If the market does tank completely, your stock holdings will be the last of your worries. The simplest of the so-called lazy portfolios (i. e. 60% market, 40% long treasuries) has yielded pretty decent return for the year . Others have not lost more than a point for the year if at all.
    Relax.
    24 Sep 2011, 04:14 PM Reply Like
  •  
    varan,

    People don't think that way - when 80% of the world's developed stock markets are in bear market territory that tells you something about the economic future assuming you believe markets have predictive ability.

    Add in the bear markets in the BRICS, commodities, oil, and now precious metals and you have a very negative trend in place so naturally people are SCARED.

    That doesn't mean you aren't going to be right it just means that people don't usually follow good advice - they buy high and sell low.
    24 Sep 2011, 04:43 PM Reply Like
  •  
    Isn't that the truth.
    25 Sep 2011, 10:08 AM Reply Like
  •  
    The game of "let's hide out in bonds" is over. Bonds may not hurt your portfolio if risk off continues, but they won't cushion it either anymore. The great bond bull of 1982 is coming to an end.
    25 Sep 2011, 09:57 PM Reply Like
  •  
    Another stock that has a very healthy dividend yield is GlaxoSmithKline - it's been very resilient even through the worst of 2008/ 2009, never rocketed, but just keeps chugging along.
    24 Sep 2011, 04:36 PM Reply Like
  •  
    Three crashes in ten years? Yikes, putting my money in my mattress where it wont grow but it wont crash either. Tired of the wild ride.
    26 Sep 2011, 01:16 AM Reply Like
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