Financial stocks are not the place to be these days. With Merrill Lynch reporting yesterday a bigger-than-expected $7.9-billion write-off in its third quarter, the message was clear. The subprime problem extended to all types of financial institutions. In Merrill's case, the loss came from write-offs mostly from its collateralized debt instruments.

Bank stocks may also be risky. Yesterday, Aastra Technologies sued HSBC Securities, a division of HSBC Bank, because it can't redeem its short-term paper. Aastra has millions of dollars in notes that have come due but for which it cannot get its money back because of the turmoil in the commercial paper market. Banks could be on the hook for billions if clients start to sue for bad advice on the stability of commercial paper.

Construction, home improvement and home building stocks... forget it. They've fallen but not far enough. See NEWSFLASH below.

Retail stocks... need to be careful here, too. If it's one of those specialty stores with a strong up-and-coming brand (like the recent Lululemon offering), that's one thing. But if we are talking the old, big retailers that sell to the masses, this could be risky, as the housing bust is definitely affecting the wallets of consumers. High oil prices are not helping the drive to the stores either.

What do we have here?

Franco-Nevada, a gold mining company, is set to raise $1.0 billion in its initial public offering. And rumor has it that investors are lining up to buy shares in Franco-Nevada. With royalty interests in 190 precious and base metal properties, investors see the company as a great play if you believe in rising commodity prices. (A 28- year high in gold prices doesn't hurt demand for these types of stocks.)

Precious metal stocks are what's hot right now and where I believe the smart money is moving to.

NEWSFLASH: Sales of existing homes fell eight percent in September, according to the National Association of Realtors, twice the fall housing analysts had expected. The median price of homes in the U.S. is down 4.2% over a one-year period. The carnage in the housing market continues, with no end in sight.