This is the time of year when investors typically rebalance
their portfolios and begin preparing for the year ahead. In
preparation for the coming year, it helps to look back and think
about the lessons learned from the previous year and how they can
be applied for a profitable future. With that in mind, we asked
some of StreetAuthority's top experts what they learned in 2010 and
how they hope to apply it in 2011.
Here's what they learned...
Here's what I learned this year: "It's theeconomy , stupid."
The market isn't going to charge ahead no matter how goodearnings
look or how optimistic the Street may be when so many people remain
out of work. Uncertainty over the tax code and health care hasn't
helped. But it's one thing for the market to sputter or stall, it's
another thing entirely for such conditions to keep the best
companies down. So while the S&P 500 didn't blow up anyone's
skirt, there were plenty of big winners in 2010, despite the tough
business climate. Cutting-edge technologies and products will
always create value, and those companies' shareholders will be
So to put it all together: Most blue chips will always mirror the
market, but game-changing companies will always set the curve.
Chief Investment Strategist,
I've learned that now, perhaps more than ever, investing and
politics are joined at the hip. I've told readers of my
newsletter how banks and brokerages have been rocked by sweeping
regulatory overhauls, how landmark reform dramatically tilted the
health care playing field, and how the Federal Reserve's
quantitative easing policy has artificially boosted bonds, weakened
the dollar and sentcommodity prices soaring .
As we enter 2011, large swathes of the market will be shaped by the
government: Will there be additional loan guarantees for nuclear
energy development? Is cap-and-trade climate legislation dead?
Could a handful of outspoken leaders spark a trade war with China?
Are we through spending on infrastructure?
If you want to have an edge over the crowd, pay close attention to
what's going on in Washington and make educated decisions about how
these and other contentious debates will play out.
Chief Investment Strategist,
We're stuck with all of the intelligence we'll ever have. But we
can keep accumulating wisdom.
Here are two lessonsI learned about investing this year:
1) The United States is no longer the world's economic center. And
despite myriad fears, that's actually a good thing.
In the past year, it's become increasingly clear that emerging
economies such as Brazil, China and India can thrive even as
Europe and the United States slump
. With their fast-rising middle classes, these economies, along
with other dynamic spots such asTurkey and Colombia, look set to
consume more and more finished goods. And finished goods are still
a real strength for the U.S.economy .
At last, we can finally say U.S. exporters have a bright future.
2) Cash is king. Companies are generating very high profits,
leading to fattened balance sheets. All that cash will keep going
toward buybacks, dividends and acquisitions, and will create a real
floor for the stock market for a while to come as stock sell-offs
are met with cash-boosting efforts.
-- David Sterman
StreetAuthority Staff Writer
It become clear to me in 2010 thatemerging markets are here to
Before this year, I understood that China, India, Brazil and other
had been the fastest growing regions of the worldeconomy for many
years and should continue to grow in the future. I also knew that
these markets had risen in relative prominence as developed
economies were wounded from the financial crisis.
But only this year did I fully realize that the global landscape
had permanently changed. For example,
that amid all the headlines about
stellar performance and General Motors'
resurgence, most investors were ignoring Tata Motors
, India's emerging auto powerhouse.
[I also found what I think is "
The Best Oil Stock for the Next Decade
" and "
The One Brazil Stock Everyone Should Own
Emerging markets will play a much larger role than ever before in
the globaleconomy from this point forward. China has become as
central as the United States to any discussion involving the
globaleconomy . The G-7 nations (a global economic summit of
developed countries) have now given way to the G-20 nations, which
include emerging market countries.
StreetAuthority Staff Writer
I can't say I had any major revelations this year, but I am further
convinced that having an investment strategy and sticking to it, no
matter what, remains extremely important.
For instance, I held tight for the most part during the volatile
periods of 2008 and through 2009, but realized that most of the
positions I ended up selling are at or above the levels I sold them
at during the downturn. What this tells me is that "buy-and-hold"
investing is far from dead and that remaining calm during volatile
periods in the market may be the best course of action. The same
probably goes for other strategies, be it momentum
investing,dividend income or other approaches.
My lesson for this year is that electronic trading has finally hit
. It has taken several decades, but it appears to be finally
entrenched. When seeing traders on the floor of an exchange, the
activity looks like a throw-back to another age.
But with technology there will likely come more volatility. Of
course, the striking example this year was the "flash crash." While
the exchanges will likely make some adjustments and rule
modifications, the fact remains that computers are making lots and
lots of financial decisions. There's really no turning back.
This can actually be good for investors with a long-term outlook,
however. When a good stock falls unexpectedly -- and by a large
amount -- it makes for a good entry point to build a solid position
in a good company.
While I suspected this, most analysts continued to prove that
they are usually wrong
. For example, as rumors about apple's announcement of the iPad
were in the news, many supposed experts said it might have a chance
to be another e-book reader, but it would never be much more.
Pre-launch forecasts for sales ranged from 1.1 million
(Oppenheimer) to 2.9 million (Barclay's Bank). Now, it looks like
Apple will sell 8.5 million iPads in 2010.
Without an understanding ofeconomics ,fundamental analysis of
stocks and even a bit oftechnical analysis , an investor is betting
against the house. If you do not do your homework, you have little
chance to win as an investor. Spend some time with valuable
resources like our
website, to gain the knowledge needed to place the odds on your
-- Brad Briggs
A graduate of Baylor University, Brad joined StreetAuthority in
2008 after working in the banking industry and at The Texas
Observer. Brad's researching experience includes... Read more.
Disclosure: Neither Brad Briggs nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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