Mon, 10/3/2011 4:22 PM – Look Out Below!

All major US stock indexes set a new low for the year today, decisively breaking through a level that had acted as support for multiple market drops since July. Panic is probably not far behind.

Gold was up 1.9% today, as and high quality bonds did well. Basically, everything else was down, led by the banks and airlines. American Airlines now trades like a company in bankruptcy. The more cyclical the company, chances are the more it was down.

Overall, my clients’ stock allocations are the lowest in quite some time. Even a lot of bond funds have been sold recently and the quality upgraded. We are keeping our gold. After a 14% correction, this may be a good place to add some to it.

I may lighten up still more on stocks tomorrow, barring a major reversal. However, we want to buy panic, though not too early.

So, I have been working on a global blue chip, high dividend, low debt buy list of about 50 companies. These are growing companies, not just cash cows. Yields are 3%-5% and better. The prices of some highly cyclical companies and banks have just gotten hammered but even drug companies and strong tech companies are yielding 4% to 5%.

The newsletter should be out in the next couple days.

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