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For just the 18th time since the last World War, the S&P 500 Utilities Index has suffered a pullback of more than 10 percent from its previous high. Excluding dividends, these past swoons have averaged a 23 percent decline over a period of about 14 months.

Our base case calls for further weakness in utility stocks, as the risk-reward balance remains skewed to the downside.

Over the past several months, we’ve systematically reduced our exposure to names we wouldn’t feel comfortable holding in an economic downturn and taken partial profits on some of our big winners—many of which have pulled back 15 percent to 20 percent since early July.

At the same time, our position in ProShares UltraShort Utilities (NYSE: SDP), an exchange-traded fund designed to deliver two times the Dow Jones US Utilities Index’s inverse daily performance, has gained about 18 percent since early July. We’ve also assembled a shopping list with dream prices for our favorite stocks.

Although we remain committed to buying and holding high-quality stocks for the long haul, our recent moves have positioned us to profit from whatever lies ahead.


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Roger S. Conrad needs no introduction to individual and professional investors, many of whom have profited from his decades of experience uncovering the best dividend-paying stocks for accumulating sustainable wealth. Roger b