Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


Get rich from the world’s most BORING stocks

Get rich from the world's most BORING stocksWhen you buy these dependable Steady Eddies, you’ll see why “boring is beautiful.” You’ll fall in love with the 39 “stodgy” stocks currently in my portfolio… because they’ve racked up an average gain of 455%. That’s enough to turn $10,000 into a staggering $55,500! These “yawners” can slam the door on your money worries. Click here to get started now.


The Year of Living Safely

By Richard Stavros on January 8, 2016

Last year, utility investors were focused squarely on the Fed–but not so much anymore.

With the recent crash in global equity markets, further slumps in commodities prices, and slowing global growth, investor concerns about how utilities might perform in a rising-rate environment have given way to bigger worries about the broader market and the global economy.

If those fears are borne out, the resulting flight to safety could make utilities the place to be in 2016. For instance, while the S&P 500 is down about 6.1% this week, the Dow Jones Utility Average eked out a gain of 0.04%.

Equally important, such anxieties could cause the Federal Reserve to make the promised gradual pace of monetary tightening even more gradual–or prompt the central bank to back off rate hikes altogether. That would be another boon for utilities.

Certainly the Fed will give serious consideration to the fact that the S&P 500 just had its worst-ever yearly start since 1928.

This week’s global market meltdown began in China. And if what’s past is prologue, the Middle Kingdom’s woes will weigh on the Fed’s policymaking.

After all, China’s slowing growth and market swoon last summer likely factored into the Fed’s decision to defer its first rate hike in nearly a decade until this past December.

And even before China’s latest debacle, some viewed the Fed’s plans to raise rates gradually as more akin to a public-relations initiative to inspire confidence in the U.S. economy than as a move predicated on a strong economic resurgence.

Any optimism on the part of U.S. policymakers may have to yield to the slowing global economy. This is the fifth straight year in which global growth is forecast to be below 3%, while emerging economies from Brazil to China are expected to continue shrinking.

For its part, the World Bank has cut its projection for U.S. growth to 2.7% this year, down from 2.8% in June, due to the surging U.S. dollar’s dampening effect on exports.

But the World Bank’s lower forecast sounds positively upbeat compared to Citibank, which recently advised clients to “underweight” the U.S.

All of these recent developments should be reason enough to seek safety from utilities while maintaining a diversified portfolio. But there is an even greater worry that economists don’t like to talk about: the specter of deflation.

The Wolf at the Door

One of our biggest concerns about recent global market turmoil is that it could lead to further declines in financial assets, a deepening in the commodities crash and a cycle of competitive devaluations in currencies such as the Chinese yuan. These are deflationary trends that could export overseas pain to the U.S. economy.

To be sure, we’ve been skeptical about the underlying health of the U.S. economy, in particular, and the global economy, in general, for some time now. Indeed, more than two years ago, as the Fed announced its intent to begin tightening, we wrote that the central bank’s “removal of stimulus could set the stage for another deflationary spiral.”

Up until now, improvements in U.S. growth, consumer spending and employment have been offsetting global weakness.

But it’s hard to ignore the fact that the Fed is pretty much the only major central bank that isn’t currently in easing mode. Clearly, its peers are already worried about disinflation, if not outright deflation.

What much of the mainstream media seem to ignore when talking about China and other countries that devalue their currencies is the deflationary impact that such actions have on U.S. businesses. These moves can force U.S. firms to lower their prices to stay competitive with overseas products, and that erodes earnings and stifles growth.

If continued global weakness leads to deflation in the U.S., then utilities will be the best investment in such an environment.

A deflationary spiral is a vicious cycle where price declines lead to lower production, which in turn leads to lower wages and demand, which leads to further price declines.

Amid deflation, capital preservation is king, and utilities offer relative security and stable income. That doesn’t mean share prices of utilities won’t dip during a downturn, but it does mean that they do a far better job of holding their value, while continuing to offer a steady payout.

Even when consumers cut back on discretionary spending, they’ll still pay for essential services to keep the lights on, the water running, and the media streaming.

You might also enjoy…


Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.