REPEAT-Bay Street Week Ahead-Ain't nowhere to hide, baby

(Repeats Friday column)

By Scott Anderson

TORONTO, Oct 5 (Reuters) - "Nowhere to run to, baby, nowhere to hide," Martha and Vandellas sang in their 1965 Motown megahit. It's a tune that Bay Street investors can probably relate to, faced with a market that seems to be sliding across the board.

Almost everyone in global equity markets has felt the pain, led by a teetering financial sector and cooling commodities. But even the so-called defensive issues are nowhere to hide these days.

The classic defensive stocks are those whose performance is not usually pushed or pulled wildly by economic cycles -- including utilities, consumer staples and a smattering of healthcare issues. They can traditionally protect portfolios from losses during downturns.

But this time around, even those sectors have come under pressure.

While the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down almost 15 percent in the third quarter, which ended Sept. 30, the utilities sector was down 16.3 percent. The consumer staples group, one of the only bright stars during that period, was off only 5.4 percent.

Even gold, the safest of all the safe haven investments provided no safety net. During the three months the TSX global gold index, which contains some of the biggest producers in the world, dropped 17.4 percent.

"There really is no place to hide in these markets. But you can't avoid the markets, you have to participate somehow," said Rick Hutcheon, president and chief operating officer at RKH Investments.

"The only thing you can do in times like this is to go after companies that have unassailable niches in their markets."

These, Hutcheon notes, are companies that have good balance sheets, reasonable income statement prospects and steady payouts.

Among his favorites are pipeline heavyweights TransCanada Corp (TRP.TO) and Enbridge Inc (ENF_u.TO) whose yields are both above 3 percent and offer a steady payout that is regularly increased.

While the TSX was nosediving during the quarter, TransCanada slipped only 4.5 percent and Enbridge fell 9 percent. Both still made payouts during that time.

"In reality, in times of unsettled markets like we are in right now, there really isn't anywhere that you can go," Hutcheon said.

"The markets are so intertwined and so complex that unfortunately people sell what they can sell and sometimes that may only be the good stuff."

But Caldwell Securities portfolio manager John Kinsey, who has seen both sides of the markets over the years, has a partial solution to the bad times.

"You always wish you had cash, because cash is king right now," he said.

Caldwell depends on government T-bills as a way to shelter cash during downturns. At present they have about 20 to 25 percent of their investments in these instruments.

But it's the remaining 75 percent in other areas that is still of concern. And like everyone else, Kinsey looks for the solid performers.

"I believe we are in a bear market and we have been in it for some time. Unfortunately, when they raid the market they get all the stocks, the good ones and the bad ones," he said.

"You just hope that you are in ones with good management, good balance and good yields and they won't go down as much as the others."

Which brings up the lyrics from another old Motown hit: "Now give me money, that's what I want." ($1=$1.08 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)