October is the worst month of the year in the Australian share market on average. It isn’t weak every year, for example October 2024 was quite solid, but it is often. This year the All Ordinaries Index has drifted down around six per cent since its August peak.

There are plenty of things to worry about. The Middle East conflict continues with neither side appearing to want an end. The Ukraine War continues. We have high inflation, rising interest rates, and the cost of living squeeze due to our declining productivity.

Recently investors have become alarmed about the cost of the AI buildout and are questioning when they will get a return. Some are also worrying that AI agents may escape their constraints and cause havoc.  

We want to make profits when investing, but first of all we want safety. The current worries are turning the focus to what investments are safe.

One investor says gold and silver bullion are best. They are real assets, not flaky dollars in the bank that are devaluing daily due to inflation. Miners like Newmont, Rio Tinto and De Beers are also good. They fluctuate but are producing real assets.

Property has been seen as a safe investment in the past, but both residential and commercial prices have fallen in many areas lately due to rising borrowing costs and the tax changes.

Another investor says the safest investments are shares in consumer goods companies like Johnson & Johnson, Proctor & Gamble, McDonalds, Coca Cola, and Unilever. Regardless of what happens people need the basics of daily life. In Australia Coles and Woolworths make the list.

Other defensive shares include pharmaceutical companies like GlaxoSmithKline, AstraZeneca, Eli Lilley and Merck. Telecoms like Telstra, AT&T, Verizon and BT also qualify.

Some people like shares in the major banks for safety – Commonwealth, Goldman Sachs, JP Morgan, Lloyds and Barclays.

One investor says shares in defence equipment manufacturers are the best option for safety – Lockheed Martin, Northrop Grumman, the UK’s BAE Systems and France’s Thales. Unfortunately, there will always be a need for their products. 

Some people still think AI is the way of the future and the big tech companies are the ones that will profit most from it. So, buy them. They are more appealing now as their prices have fallen recently. That raises a key point. Long term investors should aim to buy when prices are low, when others are rushing to sell. Do the opposite of the crowd. Don’t be too pessimistic. Things usually work out better than the pessimists expect. There are good buying opportunities in several areas now.