Amid the waves of sell orders pulling down US equities, some types of investments seem to ride out the market maelstrom, high and dry.
But tread lightly, investors: Some reputedly stable investments are less firm than during the last sinking stock market in late 1990. Utility stocks and gold especially show that once reliable alternatives to mainstream stocks can also sink.
Investors will come to crave the dull alternatives to hyper-growth US equities, say bearish analysts.
"People have to accept that normally after a significant bull market, the market trades flat for several years," says John Murphy at MurphyMorris Inc. in Dallas.
"If you're willing to take a long-term view, that's good because it might take five or 10 years to recover from what could be a 30 or 40 percent decline," he says.
But those with a more optimistic view disagree, saying the current market slump could be sharp but quick.
Bill Meehan, chief market analyst at Cantor Fitzgerald in Stamford, Conn., believes stock prices could fall as much as 30 percent but rebound by the new year.
And after last week's big gains, it may already be over.
Whether analysts are bulls or bears, they point to the same havens:
Bonds, especially US government securities, offer perhaps the most solid toeholds for anxious investors. The slowing US economy and spreading deflation abroad has prompted many analysts to predict continued lower interest rates, lifting bond prices and the profits of bond holders.
The US Treasury has just lowered the minimum on purchase of many government securities and made them easier to buy (see bonds, Page 12). Investors might consider maximizing the return and minimizing the risk by "laddering" bonds, or buying them at staggered maturities of, say, one year, three years, and five years, say financial analysts.
Or investors might allow a mutual-fund manager to do the laddering for them. Many leading mutual-fund families offer intermediate bond funds, holding securities with maturities from three to 10 years.
Intermediate bonds yield more than short-term bonds. They lag behind the yield on long-term government bond funds but pose less risk.
Utilities have consistently ranked as a top-performing stock sector in past bear markets. The government-regulated monopolies have yielded attractive income at a comparatively stable share price.
But deregulation and mergers have stirred unusual volatility - and opportunity - in the electricity sector. Utilities will still outshine most other sectors in a down market, but with less luster and consistency than before, analysts say.
Gold has sometimes fared comparatively well during a bear market, largely because it is an anchor against inflation - the No. 1 bogeyman for stocks.
But today, inflation in the United States is just a whisper. Moreover, central banks worldwide have steadily sold portions of their gold holdings and plunged the precious metal's price.
Bear funds seek to profit from a market downturn, in most cases by shorting grossly overvalued stocks or an entire market index. They are suitable for investors who believe markets will fall and they can time its capricious short-term shifts.
"The hard thing is being able to make a call as to when the market will go down," says David Harrell, an analyst at Morningstar Inc. in Chicago.
Large-cap value funds - those that invest in big companies whose stock prices are considered undervalued - are tailor-made for investors who think the seven-year boom still has some staying power.
Such stocks lack the speculative froth that has carried many shares to extreme highs. They also tend to fall less during a broad market swoon and then recover soonest.
"In any market, value investing is the only strategy that warrants an investment," says James Coons, chief economist at Huntington National Bank in Columbus, Ohio.