Our latest list of the best stocks to buy now has four new stock picks that are perfect for this volatile market.
These stock picks were hand-selected by our investing gurus. Each one is capable of withstanding current market volatility. That's because our stock picks move with long-term trends or catalysts, like inflation or new technologies, rather than short-term market fluctuations. These are trends or catalysts that are more reliable to invest your money in than betting on the next week's market activity.
But before we get to our best stocks to buy now, let's look at why the markets have been volatile this year...
It seems as soon as the Dow Jones Industrial Average surges one day, it quickly loses its gains the next. The same goes for the S&P 500 and the Nasdaq, which have both wiped out their recent gains over the last week.
One reason for the Dow's volatility is that it can't support its psychologically significant 18,000 level this year. Whenever the Dow has gotten close to 18,000 one week, it has almost immediately corrected in the same week. In most of these cases, the Nasdaq and S&P 500 typically follow the Dow's pullback.
Take a look at what happened on April 27. The Dow opened at 18,041 that Wednesday, then tanked 210 points to close at 17,830. The following day it lost another 57 points. The S&P 500 and the Nasdaq fell 29 and 87 points over the same two-day period, respectively.
And more recently, the Dow touched 17,928 last Tuesday, then finished the week down 393 points, at 17,535.32. The S&P 500 and Nasdaq finished the week down 12 and 18 points, respectively.
Even though the markets have had big swings over these past few weeks, they of course don't compare to the volatility we had last year. Think back to the tumultuous summer of 2015, when the Dow plunged 1,800 points in August. During this same time, the VIX - a measure of investor fear in the marketplace - spiked from 13 to 40.
No, current volatility is not as high as it was in 2015. In fact, the VIX is down 16% year to date.
But even so, investors still seem fearful of big stock market swings right now. And many are expecting a big fall for stocks in 2016. Just take a look at some of these signs...
Investors have yanked $44 billion from stocks over the past five weeks, according to The Wall Street Journal. These numbers are the highest since 2011 - back during the start of the economic recovery. A lot of investors are seeking refuge in much safer money market funds, instead. The Journal reports that $10.9 billion has been poured into these safety nets.
Another sign of investor fear: A reverse exchange-traded fund that follows the S&P 500 has had its assets surge 37% to 2.09 billion since the market bottomed on Feb. 11, The Journal found. This ETF gains when the S&P 500 falls. Its growth in activity shows that investors are increasingly bearish.
Yet another signal of investor fear right now is the performance of the ProShares Ultra VIX Short-Term Futures ETF (UVQ). This leveraged ETF is meant to trade along with the VIX. But as the VIX has dropped, the leveraged ETF has stayed elevated at twice the levels it was when the market bottomed in February, according to The Journal.
Even though many investors are fearful of today's markets, there are still plenty of safe, yet profitable trades out there.
For a starter - check out four of our best volatility-resistant stocks to buy now...
Money Morning Resource Specialist Peter Krauth has the perfect play to profit from gold's big comeback...
Director of Technology & Venture Capital Michael A. Robinson knows an investment that will bring you handsome profits from Silicon Valley's giant dividend hikes...
Robinson also has another market play that he says is comparable to buying Google stock in 2004.
We've got all of their picks here - and more - in our latest list of the best stocks to buy now...
Money Morning's Best Stocks to Buy Now
- Stocks to Buy Now, No. 1: After five years of depressed gold prices, commodities investors are skeptical of putting huge stakes on gold. That's understandable. It's been difficult for gold enthusiasts to watch the precious metal tank from $1,900 to $1,050 over a five-year span. But Money Morning Resource Specialist Peter Krauth sees this five-year bear market as finally being over. Negative interest rates, currency devaluation, global instability, and inflation will all push gold demand higher in 2016. Rather than buying gold directly, Krauth recommends one ETF that tracks 25 of the highest-performing gold stocks on the market. The ETF has $160 million in assets and a 1% annual yield. Get this great gold exposure play right here...
- Stocks to Buy Now, No. 2: Silicon Valley tech giants are going through a dividend hike craze. Top tech companies, like Microsoft Corp. (Nasdaq: MSFT), Cisco Systems Inc. (Nasdaq: CSCO), and Apple Inc. (Nasdaq: AAPL), are among the largest 15 dividend payers in the S&P 500, according to Money Morning Director of Technology & Venture Capital Michael A. Robinson. These tech firms have paid out nearly $59 billion in dividends over the past 12 months, Robinson says. With interest rates so low, shares of these companies pay more in dividends than you can get from money-market accounts. But why just settle for one of these dividend stock winners? You can grab 94 of the best tech dividend payers - AAPL, MSFT, and CSCO included - in one single investment. Get the best way to play the tech dividend hike trend right here...
- Stocks to Buy Now, No. 3: Cloud services was a major breakthrough for information technology. The advent of "Software-as-a-Service," or SaaS, greatly reduced costs for companies by shrinking their IT departments. Now there's a new function for cloud services. It's called "Energy-as-a-Service," or EaaS, and it's going to improve how energy companies handle your electric services. EaaS connects your devices with your utility company and allows them to communicate with each other in real-time. So if you have a power outage, you won't have to report it. Your energy company will know. There's between $70 billion to $115 billion in business opportunities with EaaS, according to Robinson. It's a revolutionary idea, and one company stands to benefit from it the most. This company has a whole division dedicated to researching EaaS technology. Check out how this company's stock will make big gains from EaaS right here...
- Stocks to Buy Now, No. 4: This company missed its first quarterly revenue expectations in 13 years, and it took a beating from media outlets. The financial press lashed out at the company, saying that its stock was finished. But Robinson isn't convinced. Ironically, one of this company's biggest stock catalysts is a country where its product sales fell 7% in the second quarter, according to Robinson. This country's middle class will quadruple in the next few years, while the number of its millionaires will jump to 2.3 million, Robinson says. This company will be a huge benefactor from this country's demographic change. Check out this company, which is currently trading at a rare bargain, right here...
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