Two crisis markets that are primed to deliver big gains
by Justin Spittler
Source: Casey Daily Dispatch
http://thecrux.com/these-two-crisis-mar ... big-gains/
Right now, I’m watching four hugely important investing themes right now that I think are going to be very profitable for those who are in position when the markets start to sink:
1. Stock Buybacks – Last year, companies spent a combined $1 trillion on dividends and stock buybacks. They used buybacks to boost their share price without actually increasing earnings. It’s an insidious bit of financial engineering…
2. Luxury Goods – Luxury goods manufacturers are seeing earnings decline while the price of their products have skyrocketed in the last decade. It’s not sustainable.
3. Oil – Oil is slipping, and I think it’s going to find a new bottom. Everyone who jumped back into oil stocks as the price bounced is going to be sorry – and we’re going to profit.
4. China – With everything going on in the world. China’s been off the radar for a bit. But the latest news out of China is troubling. The country’s “wealth management products,” which were supposed to create wealth, are now a $3.5 trillion bomb about to blow the Chinese economy to smithereens.
1. Rates will rise
Action item: Avoid bonds, dividend stocks, and all things yieldy, like REITs
2. Taxes will fall
Action item: Look to sell long time gainers that are running out of steam after the tax bill is passed, probably in Q3. Look at the list of companies set to benefit from tax cuts especially the repatriators but make sure they don’t get hit later by Trump’s protectionist policies. Bottom line, buy and own big U.S. equities, especially ones with big exposure to domestic construction and energy.
3. Energy will rock
Action item: Buy energy across the board. Petroleum in particular, not subsidized alt energy. The more domestic exposure the better.
Forbes notes that here Seaport Global Securities likes Pioneer Natural Resources, Concho Resources, and Diamondback Energy, while RBC points to fracking beneficiaries like Halliburton, U.S. Silica, Fairmount Santrol Holdings, Nabors Industries, Patterson-UTI Energy Inc, and Helmerich & Payne.
And don’t forget about coal companies (if you’re cool with that) and every else, from Exxon to Trinity to Brean’s GE call.
4. Defense stocks will fire up
Action item: Consider the aforementioned BA and LMT as well as Raytheon, Northrup Grumman, Huntington Ingalls, and General Dynamics, as well as ETFs: ITA, XAR and PPA.
5. China will be rough
Action item: Be wary of investing in China in 2017.
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