In How to protect your Money Now (April 2008), we cited 12 stocks that we thought would hold up well during hard times. Our picks in two industries -- drugs and energy distribution -- did just that. But our other choices sank beneath the waves.
In all, the dozen lost an average of 35% (including dividends) through February 6, edging Standard & Poor's 500-stock index by less than one percentage point. Teva Pharmaceutical (symbol TEVA) lost just 8% over the period, reinforcing our belief that this is a stock worth holding for years (see 7 Blue Chips to Hold Forever). Drug giant Eli Lilly (LLY) fell 22%, a decent showing. Royalty trusts San Juan Basin (SJT) and Cross Timbers (CRT) and pipeline operator Magellan Midstream (MMP) surrendered 26%, on average. The big losers were Dow Chemical (DOW), DuPont (DD) and Whirlpool (WHR), down 70%, 43% and 59%, respectively.
Not all of our picks were disasters. We suggested hedging your bets with Hussman Strategic Growth fund (HSGFX). It lost just 6%. Best of all was our recommendation of Prudent Bear (BEARX). The fund, now called Federated Prudent Bear, gained 22%.
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Outside of Treasuries, bonds weren't much of a haven for investors over the past year. Our safest pick in Bond Funds Reduce Risk (April 2008), Fidelity Advisor Government Income (FVITX), returned 6.1%, thanks to the big rally in Treasuries. Three of the other bond funds we labeled "safe" held their losses to less than 1%. They are Dodge & Cox Income (DODIX), Harbor Bond (HABDX) and TCW Total Return (TGLMX). A fourth, Vanguard Inflation-Protected Securities (VIPSX), lost 5.1%, but we think its built-in inflation shield will prove a tremendous advantage in the years ahead.
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