Get Multiples, Not Percentages
As the final step in my annual-to-semiannual macro review, I look at sectors and industries to determine which are leading and which are lagging the stock market by a large margin. I often find that some sectors that do not show up in my traditional stock-screening methods have performed in a manner that gives valuable economic information, and may provide investment opportunities. When you tend to have your head down in individual company reports, you can miss trends and data that can improve your understanding of the big picture, as well as factors that may affect stocks you already own.
Searching the list of top performing sectors, I see predictable groups like Luxury Goods. During the early days of the recession, this sector dropped off a little as the wealthy curtailed spending for the sake of appearances, but they are back with a vengeance. Those who have money, spend money. Companies like Coach (COH) and Tiffany & Co. (TIF) are doing very well. Barring a deep double-dip recession, that is not going to change. The stocks are too rich for me to buy, but I do not suggest shorting them either. Momentum types might want to have these stocks on their radar screen, too....586 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.