Stocks to Invest in 2009 (Energy and Dow Industrial Stocks)

February 15, 2009

2009 is the Year of the Ox according to the Chinese Astrology, but for the stock market participants, 2009 will be the Year of the Stock Trader.  You are going to see some volatile days with very big news revolving around long term oil prices, viability of the United States stimulus package, increasing unemployment, California running out of money, and whether the housing market will ever bottom out.

My strategy this year will be taking positions in companies that are being oversold and doing it incrementally instead of “going all in” like they say in poker.  If you normally invest in $3000 chunks, break that into $1500 chunks and reserve a bit of money in case that stock you love falls another 10% so you can cost average and spread around your funds to different sectors.  2008 showed us that no sector is immune to the slaughter in stock prices although some stocks only fell 40% compared to 80% from yearly highs.

With oil hitting $150/barrel and even though it’s sitting at barely 25% of that value, I am a big fan of energy and commodity stocks.   Knowing how important natural gas, coal, solar, and petroleum will be through every developing nation, it’s a golden opportunity to take a position while these prices are so depressed.  Banks and housing stocks will have many more tough times ahead of them and a lot of infrastructure stocks will follow the health of the economy.  Most of the ten investments below are ones that I believe will have a better chance to go up than down in the next few months.  If they do go down any further, just add more shares!

  • Alcoa (AA)
  • Procter & Gamble (PG)
  • Wal Mart (WMT)
  • Garmin (GRMN)
  • Diamond Offshore Drilling (DO)
  • Transocean (RIG)
  • Devon Energy Corporation (DVN)
  • Nabors Industries (NBR)
  • General Electric (GE)
  • Perdigao (PDA)

Most of these are large companies with none being small cap stocks.  6 of the 10 corporations have some kind of ties to the energy industry and all are well off their yearly highs.  I threw in some Dow Industrial stocks too for some dividend plays that shouldn’t take too big of a hit if the market tanks any further.  Take your 30% gains when they come and be a happy investor!!!

Disclosure: I have current ownership in Transocean.


Don’t Time Market, Invest Steadily

November 30, 2008

With the New York Stock Exchange bouncing around 8000-9000, investors are getting weary and people are checking their 401k totals with  eyes barely open.  It really is a rough time for the economy and for anybody who has been semi invested in the stock market, a gain for the year usually isn’t the case.  For those that have the luxury of having extra cash available for trading, do not be scared to invest because you need to see these depressed prices as an opportunity to cash in on some oversold stocks.  Alcoa (AA) is at prices not seen since 1994.  Expedia (EXPE) is generally at an all time low since they IPO’ed in mid 2005.  And that trend is similar for many other companies regardless of industry or market capitalization.

Since no one has a crystal ball, make sure you invest in increments and do not sink all your money into the market at once.  The novice investor will get anxious and be worried about missing a big upturn by chasing after stocks.   For some people, it is psychologically easier to buy stocks when they’re going up instead of going down.  When the market does head lower (as we’ve seen in recent times) and you have no funds to trade with, then you really have handcuffed yourself.

My general rule:
Invest 25% (divided into as many companies as you like) of your money every time the NYSE drops 5%.  Therefore you know you’ll only spend all your money if the market drops a total of 20% at your first observation of the current market conditions.   This is a good way to hedge your investments so that you don’t try and “time the market.”  Timing the market is near impossible unless you can tell the future.  I can guarantee you’ll never invest all your money at the bottom of the market and sell all your investments at the market peak.  Therefore be conservative in your investments, do not let emotion sway your choices, and understand that when the market is dropping, it should be seen as an opportunity to buy stocks at prices that you were unable to purchase before.