If you're an investor that's been safely sitting on the sidelines, patting yourself on the back for holding energy and food stocks all year, you're probably not feeling quite so comfortable these days.
In just the past two months -- at the same time economic numbers from housing, to durable goods, to gross domestic product have been slipping -- the Dow Jones industrial average has been on a tear. It is up about 9% this year and at levels last seen in January, 2006 (what a different world it was then).
Now, as the Wall Street Journal reports in its lead story today, professional money managers are starting to guess this could be the start of a major turn in the market. Or, even if it isn't, they are starting to realize they can't afford to hang back any longer. It's time for a more aggressive stock strategy.
That doesn't mean you should dump all your cash and bonds. It's still important to be diversified across asset classes in case stocks turn south (and who really an predict the direction of the market anyway). But if the bullish trends in the market continue, you'll want to be in a different set of sectors than may have worked for you in the past.
Here are a few trends to consider:
Energy stocks have been falling fast. That doesn't mean the trend won't reverse itself in the weeks to come (wait till the first cold snap), but for now, they are still a risky place to be.
Retail stocks are rebounding after getting hammered on declining consumer spending and weak back-to-school sales in August. Always wanted to own Wal-Mart Stores, Inc. (NYSE:WMT)? This could be a good time to get back in. Eddie Lampert's Sears Holdings (NASDAQ: SHLD) is also worth a look.
Tech stocks are also on the move. Apple Computer , Inc. (NASDAQ:AAPL) is a favorite tech growth name and this is a good time to look again at companies on that list. The holiday season is around the corner and it doesn't look like the iPod will be getting much competition from Microsoft's upcoming Zune. Intel Corp. (NASDAQ:INTC) is also looking attractive now, some analysts think.
Media stocks have been competing like crazy over advertising dollars as it seems everything but online advertising struggles. But with a stronger economy, spending on those glossy ads will rise. Time Warner Inc. (NYSE:TWX) is already perking up.
Go GE? There may be no single stock that is a better play on a positive outlook for the economy than General Electric Company (NYSE:GE). The stock has been rising in recent weeks and deserves more notice -- especially from those who want to remain conservative while betting on global economic strength.
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Reader Comments (Page 1 of 1)
9-30-2006 @ 11:18AM
mac said...
PLUG POWER.........HYDROGEN FUEL CELLS ARE OUR FUTURE !
9-30-2006 @ 5:36PM
sal settecase said...
I still like energy stocks especially the refiners... VLO in particular. ALSO I like one stock that could be a ten bagger or more. Genoil - GNOLF this company turnes heavy crude into light refined product like jet fuel and light crude. Have been following this stock for some tiome and I believe it is ready to take off.
9-30-2006 @ 5:35PM
sal settecase said...
There is tons of heavy crude oil we can still get to. The challenge is turning this heavy crude into light sweet crude. For the next 25 years I see this as our future not hydrogen. We need an infra structure for hydrogen that just does not exist. Untill someone gives us a plan to relace gass stations with hydrogen fuel stations this will be a dream.
9-30-2006 @ 5:38PM
sal settecase said...
Sorry for mentioning specific stocks did not know this was not allowed.
9-30-2006 @ 5:54PM
CC Rider said...
The fallacy is that the DOW really means little compared to the importance of the S&P 500 when you want to get down to the nitty-gritty of the US "stock market." If the DOW went to 12,000 or more, it's not really that significant comparatively.
10-01-2006 @ 3:17PM
Mark said...
This is a volatile market for the S&P which is bizarre when you consider the ramifications of what normally happens in October with this kind of market. I am kind of fearful with this much rise in September of what might happen this month from a historical standpoint. I know though I have done very well with the Stock Market Timer site thus far so I am going to stick with their recommendations and hopefully make it through with my gains intact too. If anyone wants to check out their site it's at:
http://charitycoinshop.com/matistmainad.html
10-01-2006 @ 4:15PM
bob said...
WSJ Sat had good opinion comment on the current market..blaming it, in part, on poor Fed decisions earlier. As for fuel, oil is still plentiful..the problem is lack of refineries and limtied drilling in gulf, anwr, etc...BUT, seems clear the alternative fules, primarily hydrogen are gathering R&D and need only to become cost effective for production and distribution to get into the mix and begin transition from fossil fuels...but don't hold yuor breath...instead look to lightening up on drilling and production restrictions first. We are learing politically that oil money in the hands of dictatorial lunatics is not a good thing...thus even the nay-sayers are leaning towward increasdd domestic production.
10-01-2006 @ 8:32PM
lana matter said...
It looks like it mighy be time for the heavy machinary sector to start its move up,or should we wait another month?