Gold versus Stocks

Wow! The S&P 500 lost 4% of its value since October 1st. That’s about $1.3 trillion and might leave you wondering….

How can I make money when the stock market goes down?

That’s where we come in! We spent the week researching companies, trying to find investments that have both growth opportunity and protect your downside risk.

We came up with 4 ideas for trades that could perform really well this month!

 

Gold (GLD)

This guy bet big on gold before the 2008 financial crisis

A lot of times, when investors are nervous, they tend to sell stocks and invest in rare metals, particularly gold. Instead of buying real gold, however, investors tend to purchase ETFs which track the price of different commodities.

Learn More About ETFS

Gold, probably the most common form of what’s referred to as a “safe haven” asset, is universally regarded as a store of value. Because gold is a physical commodity, it’s value is always reliable and doesn’t depend on market conditions, unlike currencies or stocks. So if the economy takes a turn for the worse, the government raises interest rates, or the dollar loses value, your portfolio may end up taking a hit! Regardless, gold will retain its value, and because it’s value is so reliable, the value of gold generally increases when the stock market goes down or the economy slows.

 

Costco Wholesale (COST)

If the economy suffers, people will go out to eat less and start to hunt for bargains, which will lead many consumers away from their neighborhood grocery stores and towards Costco, which offers the ability to buy in bulk and save.

This year, sales have increased by nearly 10%, and they’ve retained 90% of their paying members. Next year, the company plans to expand its operations into China.

If Amazon (AMZN) is the disruptor of the modern retail space, Costco has been its silent vanguard, reaping respectable profits and expanding accordingly for years.

 

Walt Disney (DIS)

The Walt Disney Company owns some of Hollywood’s biggest media entertainment companies.

For many, television and movies offer a low-cost form of entertainment, and while you may be thinking that you don’t watch Disney films, just remember that Disney is massive and owns tons of other companies!

They own the rights to 12 of the top 20 highest-grossing film titles of all time, in addition to owning the rights to ESPN, Marvel, Lucasfilm (the creators of Star Wars). Disney also operates a chain of hugely popular theme parks all around the globe! Not to mention they own most of Hulu and plan to offer their own streaming product for cheaper than Netflix (NFLX) in the near future.

Dollar Tree (DLTR)

Dollar Tree offers products at a discount and will become a more attractive destination for shoppers if the economy struggles and consumers want to minimize their spending.

Over the last 5 years, Dollar Tree has averaged growth of approximately 16%. With over 14,800 stores across North America and a market cap of only $20 billion, there’s a lot of room for this growth to accelerate – particularly if the economy takes a turn for the worse.