Last year, around this time, we were encouraging readers to take advantage of "rebound" trades, like gold stocks and emerging market stocks.These assets suffered in late 2008... and classic traders' wisdom tells us assets that suffer the most in a decline tend to rebound the hardest during the subsequent rally. Our recommended rebound trades produced gains of more than 100%.
Nowadays, we find ourselves in a much different situation. Stocks have soared in the past 12 months. The benchmark S&P 500 is up 47%. Some sectors, like transportation and real estate, are up more than 70%. What's the contrarian – who likes to buy unpopular assets – to do?
Today's chart says, "Want something unpopular? Check out the utilities." Utilities are basic industries that produce electricity and clean drinking water. They grow at slow rates and distribute a good portion of their profits to shareholders. And while most every sector you can think of has gained at least 50% in the past year, the big utility fund, XLU, has returned "just" 24%... and many of its holdings pay dividends over 5%.
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