Author: Mitch Jones
Covestor model: Price Momentum
It is now halfway through the year, and the major indices are up around 8% for 2012. However, these gains came early in the year. The markets got off to an auspicious start in January, but since then the market has been relatively flat. The issues of unemployment and unsustainable European debt continue to loom over the market like a dark cloud.
How can you profit in this flat market? Investing in a large basket of stocks or in an index will always lead to moderate and average returns. The market as a whole moves up slowly. I think there is more money to be made if you can be selective.
The healthcare and biotech sectors have been on a tear in the last couple weeks. Next month it will be a different group of stocks. No one can predict what will be the next hot sector or equity to own, but that doesn’t mean you can’t take advantages of the opportunity when it comes.
I like to focus on a few select stocks at a time. My model tends to buy stocks that have everyone’s attention, and I postulate that these stocks tend to outperform others in the short term. This system has worked well recently, although I haven’t really changed anything in the last few months.
For the overall market, I believe there will be a sluggish end to the year, with stocks up only slightly for 2012. The European debt crisis will continue for a couple more years. (Can you even call it a crisis if it lasts this long?). However, energy prices are coming down, and that is positive for nearly all businesses and the stock market.
