The Three Best Sectors for Stock Market Speculators this Year [stocksmarketarticles]

The Three Best Sectors for Stock Market Speculators this Year [stocksmarketarticles]

Speculative bubbles, buying stock on margin, Minsky Moments, and their potential Macroeconomic effects.

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(Reuters) - Manchester United has picked the New York Stock Exchange to make its stock market debut, ending months of speculation over where the world's best-supported soccer club would list. Manchester United picks NYSE for US public offering

Very good earnings continue to flow from smaller companies. This is a great sign that the economic recovery is real and not just due to growth in other regions of the globe. The stock market in my view is getting very close to being fully valued, with all the good news factored into valuations. Most companies that reported solid earnings have share prices trading right around new 52-week highs. This makes life more difficult for investors looking to take on new positions.

There isn’t a lot of value in the marketplace at this time, and we need a correction to provide a more attractive entry point for new positions.

I would still be long, however, as investor sentiment seems strong enough to keep the market ticking higher.

The one group that continues to be in the doldrums consists of U.S.-listed Chinese shares. There are a lot of great values in this sector, but they remain highly speculative obviously. Institutional investors have been avoiding this sector for the most part on concerns about accounting standards. In response, a number of these Chinese companies are changing their auditors to the big, brand-name firms that global investors recognize. As I say, the lack of interest in this sector has created some excellent values for investors and I would be buying some of these stocks in this market.

The other group that’s been an excellent performer for speculators is mining stocks.

But because precious metal prices are now trading close to their highs, as are most of the good stocks within this group. This means that there isn’t a lot of value for investors at this particular time.

So, other than being long the market, there isn’t a lot of action I would take right now. In equities, everything’s already gone up and the returns going forward are incremental. If there was a significant correction (which would actually be a healthy development and I do expect to happen), I would definitely be a new buyer of mining shares. The cash if flowing like mad in this industry and we’re going to see all kinds of takeovers and mergers this year. In fact, it’s already going on.

A number of professional investors like the healthcare sector and I agree with that view. There have been quite a few new listings on the stock market from biotechnology companies, and speculators can be looking here as well. Given the current state of things, however, there’s no big need to be a new buyer of stocks. Share prices now are becoming stretched.

 

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Question by skahhh: For an average investor, isn't the stock market pure speculation with some feel of where things will go? I mean, just because a company is global, just because they make a great product, can't the market makers on the exchange floor suck your money dry by selling more than is bought for a day and absorb your money into never never land, whether you like it or not? Best answer for For an average investor, isn't the stock market pure speculation with some feel of where things will go?:

Answer by Joshua M
I think it's like gambling. Instead of reading the box scores and player stats - you're reading income statements and various ratios. 'The Market' takes no notice of you. An individual investor is like a krill in the ocean. The stock price moves primarily based on instutional investors. You can certainly lose money, but there are methods that can define your risk. For instance, stop orders that sell your stock automatically if it drops to a certain price can reduce your losses. Smart Money University is a free resource, I like it. http://datek.smartmoney.com/ You can also get Stock Investing for Dummies for $ 10 (Dummies series are usually pretty good).

Answer by kid_on_theblock
yes, the stock market is irrational for the short term, but for the long term, it tends to be rational. The problem is people, mostly average investors, in our shorsightedness fail to realize the true meaning of investing, rather they opt to make easy bucks by buying and selling hoping that luck will be i their favor. What they so is more of gambling than investing. They use complicated technical analyses, listen to different analysts, read a lot of books, rract on rumors and make decisions all for the sake of short term gain. I think that short-term trading and technical analysis was popularized by brokers because they earn more money from shor-term traders rather than long term fundmantal investors. That is why they want you to buy and sell from every good or bad news that comes out. Yes there were FEW people who got rich by doing short-term trades, but why would you follow them? they are not even in the top 100 richest in the world? Why not follow the second richest man in the world who earned the title "World's Greatest Investor"- Warren Buffet. There are so many books written about him that can give an investor feasile examples to follow. i read about Warren Buffet that for you to make money in the stock market, you must be able to buy the righ stock at the right price. So it doesnt mean that you should buy shares just because a company is global, or fundamentelly strong. You have to buy it at the right, undervalued price, which for me is if it is not trading by more than 9x cashflow. Only market turmoils or correctible probles in a company can give you such bargains. good luck!

Answer by Michael M
You're getting warm, although the reason you give is not the way it works. There are several ways in which professionals may sucker you out of your money. Many of them are not legal. One illegal way is for a floor specialist to divulge the contents of his order book to the traders. A "specialist" is someone who deals in a specific stock and knows where all the open orders stand. In other words, he or she has very privileged information that they're NOT supposed to divulge. If they do divulge it, it gives the floor traders a very good edge. I'm not saying most specialists would do that. But you can't say none of them wouldn't at one time or another. There's also many other methods, some legal, some illegal, that would perhaps fall into the "morally questionable" realm.

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