Tickers in this Article: XLP, KMB, KFT, CVS, PFE, XME, XLK
Now is not the time for most investors to try and time the market. After a nearly two-and-a-half-year bull market, stocks are taking an unfortunate but natural breather and correcting. While valuations are not at nosebleed levels that many bull markets produce, they are generally not cheap either. For many investors looking for safety and protection outside of simply sitting in cash, they may want to consider the pros and cons of some various exchange-traded funds.

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Buy What Is Cheap
The boring stuff is what has the best valuations today. Necessities like medicine, food and other consumer staples don't excite investors like technology or energy. Rather than trying to pick between a name like Procter and Gamble (NYSE:PG) or Kimberly Clark (NYSE:KMB), the Consumer Staples Select ETF (NYSE:XLP) is a basket of many of these essential businesses. In addition to PG, you get exposure to names like Kraft (NYSE:KFT) and CVS Caremark (NYSE:CVS). Year to date, the XLP is up over 7%, significantly above the S&P 500 low-single-digit return. The ETF trades at $31, slightly above its net asset value and has a P/E of 15. With a dividend yield of 2.6%, the return is better than cash with exposure to companies that provide basic necessities. Don't expect a great return, but so far XLP has done better than the market.

Avoid What Is Hot
The past two years has been a bonanza for commodities, metals, and other industrial products. While the long-term outlook for commodities remains favorable, such a strong run up is not without a likelihood of a pullback. Those investors who like to short stocks may want to hedge by shorting the Metals and Mining ETF (NYSE:XME) or the Technology Select ETF (NYSE:XLK). Personally, I'm not a fan of shorting the market but it does offer its benefits if done appropriately and for the right reasons. For most investors, the best move may be simply be to avoid these industries for now and wait for a better 'buy' point if the market continues to struggle for direction.

Bottom Line
The market currently seems to only want to head lower. The near term outlook doesn't offer any favorable outcome. As stocks get cheaper, patient investors may find good buying opportunities. But knowing what to avoid investing in is just as valuable and knowing where to invest. (For related reading, also take a look at 4 Commodities Affected By The World Conflicts.)

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