1.)The US economy will pick up growth over the next 12 months. Although nothing like China’s growth the US will pick up over the next 12 months I’m looking for about 2.0% in the 1st half of the year but picking above 2.8% in the latter half of the year. Economic data has been getting better and better week after week and month after month. As this trend continues, I’m looking for this to happen. Ways to play it? For me if there is economic expansion look at the banks (BAC, C, JPM, MS, GS). But more ways for the US? Look at LOWS (I think valuation garners a look here.) Also look at names like, F and GM which have been beaten down but are making money, look for GM to back up to 30 if this is the case. Also if options are cheaper right now so look at those.
2.) IF and I do say IF the eurozone can stabilize watch for our markets to hit 52-week highs. With economic data improving and valuations at low levels compared to historical levels, companies have learned to navigate these waters and I’m looking for new highs within the next 12 months.
3.) Watch China in 2012. People have been touting how bad China has been and some of the shorts like Jim Chano’s has been spot on, but China is still growing and with this new President and Premiere coming in, I’m looking for them to start growing meaning taking their foot off the brake. Please keep in mind Europe has to stabilize for something like this to happen as China exports to Europe like crazy. But I think the children of Europe will grow up fast and take the medicine needed and will be back to their consuming ways by late 2012.
Ways to play it? FXI. FCX. CMI. I would play it through calls.
4.) Financials, Industrials, Oil and Basic Materials will be the best performing sectors of 2012. These guys have been the dog of the DOW over the last 12 months. Don’t get me wrong here, I’VE BEEN DEAD WRONG THIS YEAR on my LT positions, but I am able to stretch my horizon and my strategy for years not minutes. Growth in the US and in China will push this.
Ways to play it? Financials, Industrials, and basic Materials ETFs but for me? Regionals PNC, UBS, BAC, BA, FLR, CMI. Basic Materials? FCX, POT, We are still in cycle and I’ve believed it to be true 7 year cycle for industrials which is why I like AA at these levels 8.5ish might be some more downside but they are nothing as exposed as they were in 2008. I would look at steel names as well.
5.) Cyber Warfare to start heating up. More and more you are starting to hear about Hacking this or Hacking that. Everything is run on computers these days and security is more important than EVER. Corporate Espionage and so many things Watch CNBC (cyber wars by Melissa Lee).
Ways to play it? (Symantec, FTNT, and INTC (think they acquired McAfee for such a premium for nothing? They are getting ahead of the curve).
6.) Big-Caps out-perform small-caps. Safety speaks louder than Growth in 2012. Dividends are going to trump growth here, I expect people to play it safe. DJIA > Russell 2000
7.) Mergers are coming. I thought 2011 was the time for mergers, but with the eurozone crisis throwing everything into disarray. With all this cash on the balance sheet and people thinking they need to consolidate to survive. I’m looking for companies to start buying one another. Names that have been on my radar? JPM to acquire you guessed it. STI, I’ve been waiting for this forever and with it at 16 when I bought recently after their 29 secondary? I’m looking to hold on to this for 2012. But look for consolidation in TECH and Financials. Think savings and Loans. This is the year.
8.) Obama stays in office. Watch for Obama to get re-elected in 2012, not looking for republican candidates to beat out the incumbent.
9.) Watch for more saber-rattling and possibly more geo-political tensions in the Middle East. We had Libya and Egypt in 2011, watch for Syria and Iran and possibly North Korea in 2012. I hope this doesn’t happen was we know how important oil is to the world, if tensions start rising here? No idea what will happen.
Ways to play it? Oil under 95, SLB, HAL, RIG, XOM, COP, OIH. I expect oil to sit above 100 for most the year.
10.) Another successful year for Shinesroom.
Ways to play it? David Shine, 8ball, Melnick, Flash, Uzo, Pepe, MikeB, clong, and the rest of the team at Shinesroom and contributors.
-Benjur
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