Happy new year to everyone.
This first post of 2009 will be a bit longer than usual posts as I entered a friendly competition with a few other bloggers. The rules are very simple. Pick 4 stocks and the winner will have the best return on those 4 picks for the 2009 year. It should be very interesting as things could change a whole lot over the course of a complete year. I will describe my 4 picks along with a few of the reasons behind them. I will then link to picks by my fellow bloggers:
I hesitated between picking only ETF’s or only specific companies and finally decided to pick 2 of each, so here we go:
#1-GLD: There is a lot of speculation about the direction of Gold in 2009 and I see this as a play on a few fundamentals of the economy. First off, I can only see the US dollar going down in 2008 and that would be bullish for gold in my opinion. As well, with both Euros and US Dollars now looking very expensive, there is a good possibility that investors will turn to gold. GLD is a very solid ETF, has no problems with liquidity and I see good possibilities for this investment if the economy rebounds but also even if the economy has a relapse.
#2-USO: This pick might have a tougher time at the start of 2009 but I cannot imagine having oil at 35-40$ at year’s end, it will just put too much pressure on supplies. Sure, demand has decreased recently with the global economic slowdown. But the world GDP is still positive and there is still very much an increase in demand in the world. There is supply in many other areas of the world outside of OPEC but the problem is that they cannot sustain producing oil at such low prices. Therefore, I foresee that eventually oil prices will increase in order to be able to pick up the production and account for the increased demand. I was tempted in picking a solar energy ETF here because it is somewhat of a similar play as they are so correlated. Solar energy also benefits from huge push in renewable energy from the US and foreign governments. However, there is still a lot of unknowns about the market and its profitability so I decided to stick with USO.
#3-BIDU: This stock got slammed big time in recent months when news came out about the search engine being paid to display ads for illegal pharmeutical ads. They got hit very severely but as I had said back then, Baidu operates in China, things are a bit different and the offence, while serious, is not as serious as it would have been had it occurred for a US company. Their earnings are still strong, they still have solid growth and are undervalued in my opinion.
#4-EBAY: Ebay has been also under a lot of pressure as news of declining traffic and trouble ahead has overshadowed growth in other segments. I do believe that Ebay will have a good year although it might be under more pressure in the next 2-3 months.
So there you have it, my picks for 2009. On a quarterly basis, I will be writing about the performance of these 4 as well as the performance by the picks by my fellow bloggers. Here are links to other picks, please note that some of them are not yet published so you might need to click a bit later on:)
- Stock picks – Q3 Update – Back on top
- 2010 Stock Picks
- Trading commodities with fundamental news?
- Top 100 Commodity, Materials and Energy ETF’s
- New trade: Long Canada(EWC) – Short Russia(RWX)