January 26, 2007

what my tarot cards say

Obviously, I'm not going to say I know what stocks/sectors are going to do well, but I do have some ideas on how to pick some winners for your portfolio (this post is in response to the several questions I've received lately about what to buy -- keep in mind that, by day, I'm a marketer, and by night, I'm a blogger; nowhere in between am I a certified financial guru. =)

So my first suggestion is to look within your own industry. What companies rival the ones that compete against the one you work for? What other companies lead, depend on, impact, etc., your industry? Look for the strong ones, or the ones with real potential, and think about investing in those. This suggestion is a good one because, as someone who works in the industry, you probably have a good feel for what's real and what's perception in the media.

For example, I'm in the online marketing industry. I own shares of Yahoo, Baidu and Microsoft. Each have their proponents and their critics. However, since I'm in the industry and I feel pretty confident in what the competitive landscape looks like (versus the shallow knowledge most stock pickers have for the industry). Knowing what I know, I'm pretty confident that in the long term, all three companies' stocks will have success.

Of course, that's not to say I can be totally wrong, and that I'll lose my shirt from these stocks. But if that happens, at least I failed with the best knowledge available.

My second suggestion is to look at macro trends. What's happening in our country/world that's going to really impact the future? The biggest thing I see is the aging of the Baby Boom generation. Many, many, many people are going to get old real fast in the next 10-15 years. Pharma companies will probably do well with medication, hospitals may do well, funeral homes should make a killing (pun), retirement communities, recreational companies (such as those that sell boats or RVs), etc. Those are just some high level ideas I have on companies that should benefit from the graying of America.

On the flip side, there'll be more Generation Y (kids of Baby Boomers, aka the Echo Boom) people entering the workforce. They may be looking for financial planning advice, apartments, etc. Also, the tail end of the generation will enter college soon. Tutoring and test prep companies may do well, as well as companies offering educational loans. Again, these thoughts aren't guarantees, but they make logical sense.

1 comment:

Angela said...

healthcare and pharmaceuticals. definitely where it's at.