As the market begins to roll over, it becomes increasingly important to protect your portfolio. Of course, we advocate holding precious metals, like gold, that will hold their value in both inflationary and deflationary times – but some well positioned stocks should remain cornerstones of your portfolio as well. This type of company should boast a fundamentally stable business and a dividend stream to cushion investors in tough times, but also an element of growth that rewards investors in better times.

In the current market, some utility companies fit the bill. Withthe Obama Administration and the Federal Reserve pulling out all the stops to keep interest rates low, and many utility yields look attractive at current levels. Add in that a market pullback will likely initiate a flight to safety, and selected utilities could also offer substantial capital appreciation.

We don’t recommend going out and buying utilities at will, however, as all are certainly not created equal. Most will provide nice income streams, but the growth of that stream is largely tied to regulated rate increases. As we enter an exceptionally inflationary era, with interest rates rising (at some point), we point you towards those utilities that have an element of growth, so they can not only grow earnings – but grow their dividend payments as well, giving you a positive return in real terms.Read more...

Over the past few months, we’ve made you a similar kind of forecast – giving with one hand, and taking away with the other. Specifically, we said the Dow would make a new high, but that it would more likely signal a peak than the start of a new bull market.

Last week the first part of our forecast came true. The Dow hit an all-time high of 11,850. Meanwhile, the S&P, while well below its all-time high, continues to set new recovery highs. Other averages made a good showing too, including financial stocks and utilities.

However, before you grow too ecstatic, remember the other half of our forecast. The gains in the Dow remain unconfirmed by gains in other averages. For instance, the relative strength of the broad market, while not exactly bearish, has not kept pace with the Dow. This tells us that the number of stocks making new highs is being whittled away as the rally continues – not a fatal sign, but not a positive one either.Read more...