I have finally determined what strategy I will use for this year. I will use the same investing style as last year. I returned 61% on my stocks last year and even more in past years so will be sticking to that style forever. The difference is the sectors I invest in.
Here are the sectors I think will go up the most this year:
1. Gold
Gold has been in a 30 year slump. There is technically no limit to how long something can slump, but I forecast high inflation ahead, and I think this will be the catalyst for a very big upturn. My target price is $350. This would send my pick, HGMCY up several hundred percent.
2. Health
The United States is gaining old people, and this figure is planned to start sharply increasing in 2004. This is a very good signal for the health industry. I have been optimistic ever since choosing PLMD sometime in 98'. It is still a bargain but their are better deals right now.
3. Gasoline
While demand for oil will edge down in a recession, people won't drive less, and demand will remain strong for gasoline. New refineries won't get built very quickly. They take a while to build. People don't want them in their towns, and on top of that, tougher pollution standards for new refineries keep competition at a manageable distance.
4. Oil
Black gold prices have been behaving like yellow gold prices until the past couple years. They are finally at very profitable levels, which they haven’t seen in a very long time. Although I think a recession will bring prices down, it will remain at well over $20 for a long time. This means the companies should keep up their current high growth levels. I thought it would be too late for this sector, but I found three very good stocks that have plenty of room for appreciation.
Here are the sectors I think will do terrible:
1. Computer hardware & Technology
Corporations have spent huge volumes of cash in the past few years on technology. Suddenly this figure plummeted to a standstill. I think that this figure will rise a little but growth will be slow over the next few years because even small businesses have done their major purchasing already. I know a lot of people with small businesses, and all of them already have a computer with internet access. I expect competition to be high for a much smaller than expected market. Also, a lot of the growth was on the borrowed cash of failing internet companies, making the situation even worse. The DRAM market will be particularly hard hit because competition and supply are extremely high.
2. Luxury Goods
The recession will likely continue, and if it does the luxury good market will stop growing. Also, dot-com millionaires are a thing of the 90's, not the zeros.
4. Manufacturing
As always, a recession is going to hit manufacturing.
5. Housing
A recession would cool the housing market at a very fast pace. A record number of immigrants should keep apartments in demand though. Even with the prime interest rate at 4%, mortgages are still only a percentage point lower than when prime rates were around 6%. By the time mortgage rates are good, rising unemployment rate will keep demand cooling.
I have selected a portfolio that is roughly 50% short. This is because I believe a big downturn will happen between now and the end of October. I think indexes will be down at least 25% by October.
I selected 8 picks to sell short and 8 to buy.
Shorted:
CGNX
CHB
CHTR
CMLS
CVC
IFX
LAMR
RCNC
Bought:
AREM
AVRT
AVNT
CLT
CPE
EPEX
HGMCY
MDCI
I'll give short profiles of each soon, though it will take a while to write since I have so many more picks than last time around. Here is the Yahoo page on the stocks:
finance.yahoo.com |
