Optimistic For 2007
This time of year is typically filled with predictions for the upcoming 12 months. Sadly, very few of the "experts" who appear in print or on TV are required to review their efforts from the year before. FORBES, however, does not let us columnists off so easily, nike soccer shoes and we must render an accounting. For me, alas, this past year wasn't as good as 2005.
I beat the market by a comfortable margin in 2005, but not last year. Had you bought all 30 of my 2006 selections you would have ended the year up 5.8%, assuming (as FORBES does) that you lost 1% in trading fees. Equal amounts invested at the same times in the S 500 (with no trading costs) would have returned you 10.7%. Both figures exclude dividends. I tend toward safer, conservative big companies, a category that didn't shine in last year's air max women bull adidas soccer shoes market. Many of my picks were good dividend payers; if you added in the celine cabas tote payouts, my results would obviously be better.
Among my losers were two royalty trusts, San Juan Basin Royalty Trust ( 32 , cheap soccer cleats SJT ) and PrimeWest Energy ( 19, PWI ). These are not taxed at the corporate level, but the Canadian government last year announced plans to scotch this advantage in 2011. Although that's a long time away, these stocks tanked, losing 22% and 38%. A lot can happen in four years. Stay with these trusts.
Other dividend payers that I liked fared much better: Financial services cheap soccer shoes house AllianceBernstein (88, AB) rose 42%, while tobacco purveyors Altria (88, MO)--it's the old Philip Morris--was up 15% and UST ( 56, UST ) 46%. Keep them. UST sports a tidy 4% dividend. As always, my firm may have a position in the stocks I suggest to you.
Stick with Google ( 488 , GOOG ); it's the prime mover of the latest Web surge. If you are venturesome, also remain with New Century ( 30, NEW ), a subprime mortgage lender. The stock is down celine outlet 32% since last April when I recommended it. But the company has raised its dividend for each of the last eight quarters, and the stock yields 25%. Don't put your retirement funds here or take a large position, but at four times trailing earnings, it's cheap. And there has to be a bottom somewhere.
Now here are some new nike air max blue ideas. I am happy to recommend a few foreign stocks on the assumption that celine luggage mini your portfolio is underweighted in overseas equities.
I like the iShares ftse /Xinhua China 25 Index ( 105, FXI ), an exchange-traded fund that's a long-term play on a large and growing economy. Another longtime favorite of mine, traded in Paris, is Hermes International (119, RMS FP ), whose ties, scarves and handbags are all the more sought-after because the prices are so high. Doubtful that its sales can stay aloft, 13 of the 18 analysts who follow the stock rate it a sell. Wrong. And if you lust after a BMW, don't forget the stock of the firm that makes it. At 10 times earnings--Audi is 28-- BMW (58, BMW GY ), traded in Germany, might even qualify as cheap.
I am optimistic about 2007. Fundamentals are still supportive, stocks not expensive, and the Federal Reserve will likely cut rates, although its timing is nike air max blue uncertain. I like the fact that big investors--namely hedge funds, private equity firms and professional traders such as Goldman Sachs
(nyse:news) and Morgan Stanley
(nyse:
MS --
)--are cash rich. To them, there's a stigma about idle money lying around. That's why the private equity groups are out madly buying companies. Perhaps not always wisely, yet at least their frenetic activity buoys the market.
Ordinarily, I'd be worried by the high degree of bullishness in the air. Astonishingly, many otherwise intelligent investors rest their arguments on flaky notions like the third year of a president's second term always being a good one for the market. A while back some strategists noted that years ending in five have done well. That was true--until it wasn't. In 2005 the S 500 inched up a mere 3%. There's a difference between coincidences and causal factors. The Super Bowl and market outcomes are coincidences; Fed rate hikes are causal.
Read fellow columnist Kenneth Fisher's new book, The Only Three Questions That Count: Investing by Knowing What Others Don't. (Ken believes in the third-year theory but has a solid rationale for it: There won't be much government meddling then.) One of his key points is to make sure you are not led by foolish beliefs. Ask yourself: If my bullish--or bearish--conviction were argued before a court, would I win the case?
My concern is that too many investors are bulls only because the market is doing well now. In 2006 it did well for all except one soccer cleats month, May. If during that month your bullish conviction wavered, then you weren't a bull, you were a sheep following a herd. Not a good way to be a successful investor.
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