Markets sooner or later will move UP after discounting current economic conditions......
Lot of investors/traders love to bargain hunt in beaten down sectors like financials,retailers & housing.........
I personally believe that those sectors will have several Quarters of bad news to sift through....
Yes...some stocks in beaten down sectors will do better than others based on their ability to recover faster than others...those will be rewarded.......
Economically sensitive areas will take longer to get their footings in growth of Sales & EPS.....
I will have a tendency to ignore "struggling & anaemic sectors" like financials,retailers & housing until Q4..........
So let us look @ which sectors will do well & WHY ????
Solar,Tech,Infrastructure,Gold ,Oil & some base metals will do well going forward......
Gold is already flying...thanks to slumping US$ & is @ record high.....plus the cost of mining Gold has gone UP due to higher cost of Oil & equipments.....labour cost has also gone UP...thus a justification of higher gold price ...as most junior mines cannot afford to be in this game of exploration anymore..thus reduced supply & higher demand RATIO........
Oil has gone through a fundamental shift because of GROWING demand from fast growing Economy like China,India,Brazil,Russia , middle east,Asia & Africa.......only US & ECB is moderate growth....thus a record price " not from speculators but from demand & cost base...another gravy in the pricing structure is slumping US$.....which adds fuel to the pricing fire.......
Techs are going through many innovations and world is rapidly adapting to smartphones which is becomong multimedia darlings.....not only business driven needs are growing but consumers are in dire need to be in instant & constant "in touch mode".Music is playing a major role in storage capacity of cell phones,ipods,vpods......
Computers are being updated by millions who still are plugging along with old systems......
Camera phones are all digital & expanding their Mega pixels & capabilities in a hurry.......
Autos are using many chips to improve & enhance driving environment......
Finally the world are discovering HDTV......to everybodys delight.......where LCD & Plasma are fighting for market share.....Blue Ray is replacing HDDVD........
Infrastructure is badly in need worldwide.....more so in faster economies like China ,India plus repairs of existing infrastructure worldwide......
Solar will be the fastest growing concept for the next 20 years.......thanks to high energy cost worldwide......Energy shortage is "so acute"in many countries of the world..that they schedule "brown outs on a daily basis for hours"...I am sure that South Africa electricity shortage news is just hitting the wires......but it is very common worldwide.......
Solar is showing highest YOY Sales growth & YOY EPS is climbing FASTER than any other sectors.........
I expect solar sectors to go through rapid consolidation ie takeovers to gain market share in a hurry.......
So...instead of going after "dead sectors"who are in ICU...go for fastest growing sectors....if you want to come out "way ahead in 2009"......
I encourage you to zero-in & do due diligence in the sectors I have identified.......
It IS NOT hard to come UP with good stocks in each of those sectors.....
My recommendation will be to come up with 2 stocks in each sector & have exposure in all of the above...so a max 12 stocks in all sectors MAY not be a bad idea......
Instead of being overexposed in ONE or TWO stocks...I suggest that you distribute the same $ in 12 stocks......
Serious money will be made with investor mentality than trader......
Nice & easy will do it ...when you look towards 2009 $$$$$$
Good luck on YOUR homework,patience & conviction........
BLOG does NOT give buy or sell.
Saleem
16 comments:
Hi Salim,
How much cash are leaving on the sidelines? At the moment I am in about 50% cash and when there is a dip I put about 10% of that to work. Thanks so much for all your help!! Charlie
Hi Charlie,
As we are trying to build a base in markets NOW.....
You are doing the right thing by buying more into any dips.....
We normally will open lower but close on a stronger footing...which is a sign of basing.
Next two weeks you can put rest of your cash to work ..the way you are doing....
Good luck !!
Saleem
saleem thank you for your fine market commentary and reasonable advice.. if you have time could you evaluate or comment on my current individual stock portfolio regarding diversification this is a part of overall portfolio of cash and a domestic and international mutual fund own LDK HOKU WFR and larger position in PBW all at loss own agu at small gain MOO at small loss bought CMED at 41 FMCN 55 and finally apple at 130 thank you peter
Hi Peter,
Your portfolio looks very good.....diversified in many high GROWTH sectors.
CMED is now among the fastest growing medical device sector...
FMCN is the leader in LCD targeted ad in China.....
MOO & AGU is in exploding AG sector...which has 5 year high growth.....
AAPL is the-most undervalued stock in tech with high growth ahead...
LDK,WFR are growing their Sales & EPS in a hurry....HOKU is a highly speculative stock in solar.
All in all...you are looking GOOD!!!
Saleem
Hi Saleem. I have a good ? on solar for you. Stocks such as CSIQ, SOLF, STP, JASO etc. have taken a huge hit because (presumably) rising poly prices. Companies like LDK, SOL, and HOKU who are planning on making poly have had their shares hit as well as analysts say poly prices will drop when more poly comes in. My question, why are both groups down and how can analysts claim both arguments as they argue against each others point. If poly prices come down, CSIQ etc. wins. If poly prices fail to come down, LDK etc. will win. How can they predict both groups to lose? I think poly producers will be the big winners (although CSIQ etc. may still produce good gains). Like corn re: ethanol, poly prices will still stay high as the appetite for solar grows. Just my opinion. What do you think of SOL?
Hi Minaccess,
SOL is trading 21.7% lower from its high......
If you like low price solar wafer producer...$11.10 is what you have to pay...
SOL is trading @ PE of 38.28.....
Market cap of $1.32 Billion.....
I suggest you go into solar with 3 different stocks...& you will do well....
Analyst are driven by their OWN agenda......so their opinion is NOT worth much @ this stage.....
So if you go with Silicon wafer & PVC cell producer...then you are covered on both end....
Solar will win big going forward whether they are in Silicon or PV cell.....
SOL is ok in a diversified solar approach....
Saleem
Hi Saleem,
Better week ahead. CMED could be a 10-bagger as they say. I bought on the dip at 38,44,46. Now its just a waiting game. The real earnings will start coming in this year. Buying the bio company effectively opened up new marketing channels. Should be a good year. Can't wait for fall 2008!
Standards
Hi Standards,
Yes ...CMED is a long-term hold now.....as stars are aligned....
CMED has done a good job of creating a niche in medical arena...
Good luck...from hereon !!!
Saleem
SALEEMK
Happy SUNDAY evening
I like your total approcah to the market and diversification! Thanks for keeping us all on target.
I am still mostly in hte deep red zone. Wnat for the over sold condition to change in positive direction.
I too believe in CMED as I do in SOLAR stocks and AG stocks. I got RIMM and NYXm SOLF, LDK, CSIQ, AGU, and GS.
Cheers to all!
Have a good evening and a fantastic Monday.
Madmax
SALEEM
Interesting news on AG stocks and etc:
http://biz.yahoo.com/ibd/080208/industry.html?.v=1
Madmax
Hi Madmax,
You are well diversified.
Markets are almost ready to finish discounting "whatever is ailing US & world economy"
If we all are in red @ the bottom of freefall...then we have a very good chance of being in GREEN...when turnaround in markets occurs......
Saleem
Saleem
Thanks Saleem. LDK, SOLF and and SOL/CSIQ would be my three or four picks. In 2009 we will be happy with solar.
Hi Saleem,
Nice to find an individual with thoughts of his own. A free man. A free thinker. An unbought man. Too many are bought and owned. Economic slaves to their masters. Keep up the good work.
Standards
Hi Standards,
Thanks for your appreciative & complimentary words.
This BLOG always looks BEYOND the OBVIOUS.......
While everybody else is looking in rear-view mirror...and DO NOT like what they have SEEN....
Life is all about ..looking ahead & planning for FUTURE !!!
Trust me ..there is a future for MANY stocks !!!
Saleem
Good morning Saleem,
I would like your thoughts on MA. I am considering buying MA if we test January lows on a third leg down. We know the distinct differences that MA has over other credit cards, so my question is: do you think MA will flop around like other financials, or could it be a spring load for a quick rebound? Thanks for your thoughts. Hope you have a great day. Doug...
Hi Doug,
MA is a very strong story.....
I do not consider MA as financial...I think it IS the strongest growth story in the market.....
I sold AAPL not MA ..because of relative growth & much higher expectations.....
MA is NOT a bargain from any definition....it IS the only stock which IS only 8.1% away from its all-time HIGH.....
Strong stocks will get stronger like MA....
MA is benefitting from current credit squeeze $$$$
By the way...I do NOT believe there is a 3rd leg DOWN.....just a normal garden variety pullback here & there !!!
Saleem
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