What to Buy in 2015
The dollar is up. Unemployment is down. Profits are rolling in. Inflation's in check.
Sounds like a recipe for yet another good year for investors, right?
Hold on -- Cassandra wants a word.
You remember Cassandra? She's difficult to forget. The Greek god Apollo was so struck by her beauty he gave her the gift of prophecy.
Then she rebuffed his advances.
Apollo didn't take rejection well. He cursed Cassandra, so that her warnings would forever go unheeded.
Cassandra might tell you this bull market is geriatric. She could say the market-greasing effects of friendly monetary policy may soon disappear. She may point out that the energy sector is in turmoil.
Spooked yet? Don't be. Cassandra isn't a stock picker -- she's just a metaphor.
Despite a few flies in the ointment, the market is poised to reward savvy investors yet again. A strong economy will be a boon to domestic stocks. Global economic struggles will provide plenty of bargains.
Let's go hunting for opportunities.
Energy sector consolidation
Feel like trying to catch a falling knife? How about a falling cutlery set?
Welcome to the 2015 energy sector. Oil prices have been essentially sliced in half. Volatility is everywhere.
Yet opportunities are lurking in the background. If the price of oil doesn't recover, marginal players will be pushed to the brink. The landscape will be ripe for consolidation.
Blue chip energy firms will be ultra-aggressive in the hunt for bargain acquisitions. That could mean huge opportunities for investors.
Retailers such as Wal-Mart are also poised to reap significant benefits from cheap fuel. All retailers, in fact, should benefit from a stronger economy and rising consumer confidence.
Tire makers should benefit from lower material costs. The travel industry will benefit from cheaper gas.
The opportunistic investor could benefit from both.
Large-cap technology companies
A few of the tech space's premier companies are coming off blockbuster campaigns. Microsoft and Intel both brought investors huge returns in 2014. These Darlings of the Dow are well-positioned to continue that success. After all, corporate America is still tied to the PC.
That's not the only reason to be bullish on the pair. Both companies have shown a vision for the future. Microsoft has been emphasizing cloud computing. Intel is focused like a laser on the "Internet of Things" -- essentially an effort to make the Internet smarter through billions of connected devices.
Both companies also have reasonable valuations. Intel is also sitting on billions in net cash. The company isn't shy about sharing it with shareholders.
Technology is looking strong, and the best bets are at the top.
Sometimes the unexciting yet mature option is the best option.
Reaping the rewards of rising rates
Who benefits from higher interest rates? Financial firms, foremost. Stocks could see a bump when the Federal Reserve decides to act. Buyers will seek mortgages, afraid that rates will keep going up.
The same can be said for insurance. Premiums often rise when inflation ticks up.
In the same vein, higher rates could be bad news for utilities. Companies with growth issues or the need to borrow money are likely to suffer.
Large cap tech firms often thrive when rates jump -- especially companies with huge piles of interest-drawing cash. Apple is sitting on more than $150 billion in reserves -- more than many countries, and the U.S. Treasury.
Don't let market Cassandras spook you. The stars are in alignment for another strong year.
We're here to help you take full advantage.