Wall Street Is Preparing for a Storm

Editor's note: 2021 was an easy market for making money. Now, it's a different story. Between high inflation and a war in Europe, volatility is back in 2022. But certain areas of the market can help you survive times like these. Our corporate affiliates at Chaikin Analytics are joining us to share one of those investments today...

The "smart money" is on the move...

Regular readers know we're referring to institutional-level traders and fund managers. They're the big guys in the investing world, and they usually get it right. So it's critical for us to always know what they're doing.

Right now, these smart-money traders are piling into one group of "defensive" stocks – consumer staples.

These companies' goods or services will still sell even if the economy struggles. They've traditionally been a great defense for investors during a downturn.

You're probably wondering what this means for the rest of the market. The answer is a little grim...

Over the past six months, the Consumer Staples Select Sector SPDR Fund (XLP) is up roughly 10%. This exchange-traded fund ("ETF") is packed full of defensive companies...

Its top five positions are Procter & Gamble (PG), Costco Wholesale (COST), Coca-Cola (KO), PepsiCo (PEP), and Philip Morris International (PM). The ETF also holds other big names like Walmart (WMT), General Mills (GIS), Hershey (HSY), and Colgate-Palmolive (CL).

Consumers won't stop buying from these companies unless the world comes crashing down. The products they sell are "essentials" – like toilet paper, cereal, and toothpaste. That's what makes them perfect defensive investments in hard times.

The S&P 500 Index, our broad measure for the stock market, is only up around 6% over the same six-month period. In other words... consumer staples are outperforming the market.

That's an ominous sign.

The smart money is binging on consumer-staples stocks right now, too. That tells us the big guys in the investing world are seeking shelter from a potential storm.

Now, I should be clear... That doesn't mean a bear market is imminent.

But it does mean that Wall Street's brightest minds think now is a good time to prepare for one. And when that's the case, you'd better make sure you're preparing, too.

Fortunately, consumer-staples stocks are a great way to do that...

The following table shows how XLP, the S&P 500, and the tech-heavy Nasdaq Composite Index all fared during three major sell-offs over the past couple of decades. Take a look...

The data makes it clear... When the market falls apart, consumer staples hold their footing.

Sure, the sector fell during those three sell-offs. But in each case, the declines weren't as bad as the incredible destruction in the broad market and tech stocks.

Now, the smart money is preparing for another storm. It's piling into defensive sectors like consumer staples.

We can't know if the storm will happen tomorrow, next week, or even months from now.

But whenever it happens, history shows us that this isn't a signal to ignore. During three major sell-offs over the past couple of decades, XLP held up much better than the broad market and tech stocks.

The smart money knows this... So make sure you're in line with them today.

Good investing,

Marc Gerstein

Editor's note: Earlier this week, a Wall Street legend from the Chaikin Analytics team stepped forward to warn investors about a dramatic market shift. It's called a "Rolling Crash"... And we've seen it cause waves of losses in specific corners of the market. Importantly, there's a secret to spotting where it's rolling next... If you missed the presentation, watch it right here for the full details.

Further Reading

The smart money usually gets it right, so it pays to know what Wall Street pros are doing with their investments. That's why Marc Chaikin created a proprietary tool to track their movements... Get the full story here: This Is Like Sitting in on Private Board Meetings.

Having the most advanced tools and insights gives you a massive advantage in the markets. But if you want to be a successful investor, it's crucial to start with this one simple tool... Read more here: Pro Investors Do This... Amateurs Don't (But They Should).

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With the "smart" money pouring into consumer staples, buying into the sector could be a profitable move today. And one world-dominating stock is a great way to play this trend...

Market Notes


Today's stock is soaring as the self-storage trend picks up steam...

Regular readers know we like businesses that take part in big, secular trends. These days, Americans have too much stuff and nowhere to put it. This has been especially true during the pandemic... And it has pushed occupancy rates and rents for storage companies to record highs. Today's company provides the extra space people need...

Public Storage (PSA) is the world's largest owner, operator, and developer of self-storage facilities. It has more than 2,700 facilities across the U.S. And it serves more than 1 million customers. With people turning spare rooms into home offices and landlords hiking prices, folks are even more motivated to find space for their extra stuff... helping Public Storage thrive. The company's same-store revenues jumped to $2.8 billion in 2021, up nearly 11% year over year.

PSA shares are in an uptrend – up roughly 160% from their pandemic lows, including dividends. And they recently hit a fresh all-time high. As folks continue to store their extra stuff, that trend should continue...