Are You Biased Towards Trends In 2010?
The Dynamic Wealth Report
December 31, 2009
by Justin Bennett, Editor
Here comes the New Year! This is the last Dynamic Wealth Report
for 2009. Everyone at Hyperion Financial wants to wish you all a happy
and prosperous 2010!
It’s a good time to take a look at some upcoming trends…
When looking at these upcoming trends, we want to remain open to all the
possibilities. What I mean is, we don’t want to create a strong “bias”
in one way or another.
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When you create a strong bias towards what you “think” will happen, you
stop being open to all the possibilities of the current moment. If an
opportunity arises that’s opposite to your bias, you’re likely to miss
it.
Why?
Because the current market information doesn’t support your bias.
Therefore you subconsciously ignore it.
That’s why I say we want to “take a look” at some possible trends. I
don’t say, “This is the upcoming trend and it’s going to work this way
or else…”
One fundamental trend looking promising is that of agricultural
stocks. Here’s why…
Global demand for wheat, corn, soybeans, and other Ag commodities is set
to rise. Producers of these commodities use fertilizers to promote
plant growth. Higher demand for the commodity means higher demand for
the components of production (fertilizer).
Companies such as Mosaic (MOS), Potash
(POT), and
Agrium (AGU) are all fertilizer producers.
You could make investments in these individual stocks. But be careful…
volatility in these stocks is relatively high. If you get on the wrong
side of a big move down, you could get shaken out for a big loss. A
safer way to play this upcoming trend is with the Market Vectors
Agribusiness ETF (MOO).
MOO holds a basket of Agribusiness stocks with exposure to the
fertilizer industry. MOS and POT are both included in the MOO ETF.
Investing in an ETF exposes you to less single stock risk.
The oil services industry, another promising trend for 2010 and
beyond…
Don’t get fooled into thinking green technologies are about to replace
oil. Should we be pushing innovation towards new technologies?
Absolutely, our future depends on it.
But the fact remains… oil is the lifeblood of the world economy. It’s
going to remain that way until new technologies can be scaled up to
match the cost efficiency of oil. Unfortunately, we’re still quite a
few years away. The sooner it comes, the better…
Until then, companies servicing the oil industry such as
Transocean
(RIG), Atwood Oceanics (ATW), and Baker-Hughes
(BHI) should see constant demand growth. (That is, as long as the world
economy continues to come out of the recent “recession”.)
What’s the best way to take advantage of this trend?
You could always invest in individual oil service companies like the
ones mentioned above. Just be sure to do your own due diligence…
Or you could take a look at the iShares Dow Jones U.S. Oil
Equipment & Services ETF (IEZ). The IEZ is a basket of stocks
focused on the oil services industry. It holds stocks such as
Diamond Offshore (DO),
Schlumberger (SLB), and Halliburton
(HAL).
Keep an eye on these trends going into 2010…
Their fundamental stories are likely to push them higher. Consider
adding them to your portfolio on pullbacks to key support levels.
But like I mentioned above, be open to all the possibilities the market
has to offer. A big news event can change market sentiment in a
heartbeat. Being “biased” in one direction or another can cause you to
miss other opportunities.
One of the most active ETFs this holiday shortened week is the
SPDR S&P 500 (SPY). Volume is light this week as many traders
and investors are on holiday break. Expect volume to pick back up next
week.
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