Investment Outlook 2007 - Part I
I am mapping out my 2007 investment framework. A long shot, but planning before execution is vital to success, in my opinion.
To begin with, this is not Dow/S&P index prediction for 2007. There are a handful of them, BusinessWeek for example, if you're interested. I have no clue where those indexes will settle in a year. And the truth is, the overall market trend is determined by many dynamic factors that I doubt the value of those fearless forecasts.
So what I am writing here are more specfic and actionable ideas on paticular sectors and some guidelines when choosing stocks.
First of all, let me brief my view on the market. I am overall conservative based on my judgement that the prospect of US economy growth is limited. Economy growth usually comes from either Government or/and Consumer. In our case, with the huge and ever-growing current account deficit, and massive tax cut, US Gov has little ammunition to stimulate the economy. In the meantime, US consumers is infamous for spending more than saving (average 2006 US household saving is about -1%), with the housing market slump in 2006, higher energy and healthcare cost, consumer-driven economy growth is questionable.
Having said that, market still has plenty of opportunities. Here is a list of summarized points about my investment framework in 2007.
1. Invest Energy (e.g. Crude Oil), and Precious Metal Sector when price fluctuates. Price will continue to be volatile, but will only go up in long term as the imbalance between ever-growing demands and irreversible supply.
2. Invest in Financial Industry / Debt Collection Sector. US consumers are generally under financial presure, and this plays a defensive hand if my overall economy prediction above turns to be true in 2007.
3. Avoid Retail, and short "Apparel Store" sector that targets middle class customers. Similar reasoning as point 2.
4. For similar stocks, Prefer ADR(ownership of shares in a non-US company), or international companies listed in US to US companies. This is based on the not-so-positive view on both US$ and US market.
5. Maintain some cash position. Cash is king, and don't be afraid of holding it. With fluctation, I think the market will present opporutnities during 2007. Can only catch it if you have cash in hand.
In the next a few posts, I will elaborate each strategy in details, and layout actionable ideas I have. When I do this research, I came across a few independent-thinking articles on the similar subjects that provide me good insight. List below for your reading.
Eric Kallen's view on 2007
Bill Cara on Global Markets
Deloitte Global Economic Outlook 2007
Also, I am interested to know what you think of the market in 2007. please share your investment ideas. I will include them in my posts to supplement mine.
To begin with, this is not Dow/S&P index prediction for 2007. There are a handful of them, BusinessWeek for example, if you're interested. I have no clue where those indexes will settle in a year. And the truth is, the overall market trend is determined by many dynamic factors that I doubt the value of those fearless forecasts.
So what I am writing here are more specfic and actionable ideas on paticular sectors and some guidelines when choosing stocks.
First of all, let me brief my view on the market. I am overall conservative based on my judgement that the prospect of US economy growth is limited. Economy growth usually comes from either Government or/and Consumer. In our case, with the huge and ever-growing current account deficit, and massive tax cut, US Gov has little ammunition to stimulate the economy. In the meantime, US consumers is infamous for spending more than saving (average 2006 US household saving is about -1%), with the housing market slump in 2006, higher energy and healthcare cost, consumer-driven economy growth is questionable.
Having said that, market still has plenty of opportunities. Here is a list of summarized points about my investment framework in 2007.
1. Invest Energy (e.g. Crude Oil), and Precious Metal Sector when price fluctuates. Price will continue to be volatile, but will only go up in long term as the imbalance between ever-growing demands and irreversible supply.
2. Invest in Financial Industry / Debt Collection Sector. US consumers are generally under financial presure, and this plays a defensive hand if my overall economy prediction above turns to be true in 2007.
3. Avoid Retail, and short "Apparel Store" sector that targets middle class customers. Similar reasoning as point 2.
4. For similar stocks, Prefer ADR(ownership of shares in a non-US company), or international companies listed in US to US companies. This is based on the not-so-positive view on both US$ and US market.
5. Maintain some cash position. Cash is king, and don't be afraid of holding it. With fluctation, I think the market will present opporutnities during 2007. Can only catch it if you have cash in hand.
In the next a few posts, I will elaborate each strategy in details, and layout actionable ideas I have. When I do this research, I came across a few independent-thinking articles on the similar subjects that provide me good insight. List below for your reading.
Eric Kallen's view on 2007
Bill Cara on Global Markets
Deloitte Global Economic Outlook 2007
Also, I am interested to know what you think of the market in 2007. please share your investment ideas. I will include them in my posts to supplement mine.
posted by Siyu LI at
8:33 AM
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