Covestor's  Instablog

Send Message
Covestor is the world's largest online platform for investment management. We pioneered Social Investing, which allows members of an online community to mirror the real transactions of the world’s best investors. Our online marketplace connects individual investors with professional portfolio... More
My company:
My blog:
Smarter Investing - Covestor
My book:
Generating Income in 2014 (Free eBook)
  • Beer, Batteries And Bisquick: Why Investors Are Shopping For Consumer Staples Stocks 0 comments
    May 2, 2014 9:15 AM | about stocks: XLP, SPY

    Beer, batteries and Bisquick: Why investors are shopping for consumer staples stocks

    May 1, 2014 by John Spence

    Consumer staples stocks are hitting record highs and outperforming the S&P 500 recently as investors favor defensive sectors that tend to do well when the economy hits a rough patch. These are "boring" companies that sell products that consumers buy in any economy - think basic food items, detergent, cigarettes and beer.

    "The defensive rotation is heavy," said Tarquin Coe, a technical analyst atInvestors Intelligence, in a note this week. "The SPDR Consumer Staples ETF (XLP) is breaking out to new all-time highs, reasserting its two month relative uptrend against the S&P 500."


    The best-performing sectors of 2014 suggest investors are migrating to industries such as utilities and energy that are viewed as safe havens or generally perform better in the later stages of the economic cycle.

    Overall, "widow-and-orphan" stocks in stable industries that pay higher dividends are outperforming flashier growth names the past couple months. It's part of the recent trend of investors favoring safer value stocks over high-momentum and riskier small-cap names.

    As the bull market stretches into its fifth year, cyclical sectors like financials and consumer discretionary are lagging, says J.C. Parets at the All Star Charts blog.

    He also sees a rotation out of aggressive, "offensive" sectors like retail and homebuilders, and into havens like consumer staples.

    "No matter how bad the economy gets, we're still going to drink beers, smoke cigarettes, brush our teeth and wash our dishes," Parets added. "That's never going to change."

    Similarly, in the bond market, he sees a move away from riskier, high-yield sectors and a preference for safer Treasury bonds.

    Put it all together and it seems there are some jitters underneath the surface of the market even though the S&P 500 is near an all-time high.

    Photo credit: Thomas Hawk via Flickr Creative Commons.

    DISCLAIMER: The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. All investments involve risk, the amount of which may vary significantly. Past performance is no guarantee of future results.

    Stocks: XLP, SPY
Back To Covestor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.