The Flight to Safety Is Upon Us

 | Oct 08, 2013 | 12:18 PM EDT  | Comments
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Oh boy, are the wrong stocks ever rallying. The recession stocks: Hershey (HSY), Procter & Gamble (PG), Clorox (CLX), Kellogg (K). Makes a ton of sense, given that there seems to be no way that we can avoid a train wreck, and you don't want to own anything but consumer packaged goods into a lunatic moment.

I was worried this moment would be upon us. We have Alcoa (AA) about to report. We have the banks posting really difficult comparisons. We have a slowdown stemming from the shutdown, and we have a calamitous event ahead.

Why not buy the down-and-out staples? At least they won't crush you with their outlooks, especially the ones that have come down so much that they actually have bond-market-equivalent protection.

The only concern I would have in buying them is that at a certain point we are going to get a deal, and they will come down, but those who are smart enough to be buying them now know that there's no deal until perhaps after Oct. 17, and that puts these stocks in the sweet spot, particularly compared with tech, which is just being crushed here.

Interesting that the drug stocks are not rallying. They seem to be in some sort of purgatory, perhaps related to the FDA not being able to deliberate? Maybe people are worried that there will not be as many fourth-quarter approvals that are already in the numbers? The feds do have a long reach.

You did know it had to happen. The S&P 500 is down 4%, a full-blown correction is upon us, perhaps. No better place to hide than a food stock with raw costs coming down and pricing holding up.

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