Christmas Wishes - My Top 10 2009 Stocks

Top Ten Stocks 2009
Well, we ended early today with a pretty uneventful day as we saw just a bit of Christmas Eve cheer to end the market up about .58%. So instead of talking about the few things that happened today, I thought I would take a peak into the future and give you my top 10 stocks for 2009. Most of these will be dealing with the first part of 2009, as I feel there could be some serious profits made on both the short and long side. If you are without an account, you can open one with free monthly trades at Zecco.com. So without further adieu, I give you my top 10 stocks.

1. SRS - SRS has taken a huge beating the past month as banks gained ground with bailout news and government intervention. Being involved in commercial real estate, I have a good knowledge of what is going on out there. The debt that is due the next two years is substantially larger than the residential we've already had problems with. With more retailers going BK next year, I can't see how SRS won't do well.

2. GDX - Although it may take a bit to get jump started, I have loved gold since it hit its recent lows. Our next problem will be inflation, when we figure out our bank problems, especially if we keep printing money like we are with a 0% discount rate.

3. FXP - Like SRS, FXP has also taken a beating the past month. Next year, as this recession plays deeper into the consumer, it should hurt exporting nations severely. Especially with the huge workforce in China and the building turmoil, I expect to see some serious interior rioting and government instability.

4. DIG - Like GDX, this may take a bit to find it's ground, but oil is acting much like a pendulum. It was pushed up into ridiculous prices earlier in the year when prices we're creeping to $200 a barrel. Now, it has been oversold as it lowers into the $30's. My guess is oil should be trading at around $75 a barrel and should stabilize there in 2009. It may take some time, but DIG should definitely get some love as it moves back up.

5. TBT - This ETF shorts the Lehman Treasury 20+. US Treasuries have been extremely overbought, as investors have lost a lot of confidence in the market. As a result, the returns on treasuries have hit pretty much 0%. I expect a serious retreat from treasuries in 2009 which should bear well for TBT.

6. VZ - This is my cash flow stock. Verizon has a great balance sheet with great market share for their sector. They also have a great dividend. They have proven to remain resilient during this tumultuous market. Although I don't expect huge gains from them, they act as my buffer and I still like VZ in 2009.

7. AAPL - Apple has taken a pretty strong beating these past two weeks due to some downgrades. The fact of the matter is, yes I believe tech will struggle more next year, but I believe Apple should lead the pack. With the amount of cash they have sitting in the bank, coupled with their extremely innovative product line, I can't see them remaining below $100 for too long. I know so much hinges on Jobbs health, but I think he can hold on for a few years.

8. YHOO - I think a buyout is imminent. And whether it is Microsoft or someone else, Yahoo's current stock price is way to tempting for a hostile takeover. E-commerce is on many company's radar for the future, and what better engine to lead you into it than Yahoo. I think it should take a quick pop soon as soon as someone can get financing to buy these guys out.

9. VMW - This was one of the most hyped stocks when it was publicly offered, shooting above $100 the first day of offering. Now, it has fizzled its way down to below $20 territory. Sure, they have had problems with management and competitors, but their technology and market share remains the same and as they integrate their technology with mobile phones and other devices, I see some serious upside for them in the future.

10. EEV - The explanation for this buy is much like the one for FXP. Emerging markets are a great buy when every country is buying. However, during a global crisis, everyone tries to keep things in house. I see some good profits from EEV.

So there they are. Mind you that some are long positions that I may not take until 2nd or 3rd quarter 2009, but I believe the upside is there. I still feel some of the above listed will continue to lose value, I just think they have the most upside for 2009 at their current levels. I hope everyone has a Merry Christmas, or any other holiday you are celebrating. Have a great evening, Happy Trading.

13 comments:

  1. Anonymous Says:

    I am heavily invested in USO and not DIG. I guess if DIG picks up so would USO. Correct?

  2. Scott Says:

    Disturbing Top Ten!?

    First I'd like to say that I've learned a few what-to-do and what-not-to-do strategies from your blog, so thanks! I'm just a little concerned about your readers that might not have approached your techniques with a little caution.

    I think I would put the ETFs away for a while, something tells me that they'll be coming under some serious pressure in 2009 under the Obama administration. They've completely failed the market and should be pulled from the shelves.

    Have you done any technical analysis on these Ultra ETFs?

    How has FXP performed for you this year?

    Do you set your stop losses?

    Do you have any gain/loss stats that you'd like to share? From your earlier posts it sounds like your options positions have offset any losses to your Ultra short ETF positions, is that true?

    Was your averaging up, down, and all around techniques due to panic, or was that your strategy from the beginning?

    Have you read the latest articles at Realmoney by Eric Oberg, former GS managing director, titled Why Short Sector ETFs Aren't So Smart-part 1 and 2?

    Take care,
    Scott

    Long AAPL, F, UYG

  3. Finance Fanatic Says:

    Well Scott, you may have not found success in the etfs, but I have. I have doubled my FXP investment twice in two different rounds. I am down this round, but am still very much up from the prior two rounds and feel FXP is on its way back up again. I have done my research on Proshares and I personally am comfortable investing in them. I don't feel like they will receive any pressure from Obama in the short term, as he has bigger fish to fry for the next 3 years, like helping get people jobs and bailing out the massive upcoming retail bankruptcies.

    Sometimes, I use stop losses, it depends on where I am buying in at and what my strategy is for the particular stock.

    I did not completely cover my losses from the long options that were purchased, but it lessened the blow severely. With going short, I usually use the averaging down concept, as I feel we will be in a bear market for at least another 6 months. I don't panic, its not worth it. And you only take a loss when you sell.

    I have read the GS article as I have read others, and there are arguments on both sides. A month ago, when the inverse etfs were at 200+ values, nobody was complaining about them. I guess those that bought in at those prices, should be mad at this point.

    The point is, these inverse etfs can be great vehicles for quick profits, if timed correctly obviously. Sure, some profits are eaten up through management expenses and what not, but for me, I have benefited greatly.

    I can't say I agree with you on your long for F and UYG, considering F may not make it through the winter, and as for UYG, The conduit CMBS loans that come due next year are monumental. If we thought, this past year was bad with the banks, hold on... I just went to a BofA meeting last month, and it was not pretty. The speaker said he felt that it wouldnt be until 2016 until the cmbs market came back.

    So, Scott, you have the right to your opinion, as I do mine. Notice on the title it says My top 10. I have found a lot of successes in the market thus far.

    My readers should make their own investing decision, not yours or mine. I just keep a record of what I am doing and the successes I am finding. I wish the best for you and appreciate your concern. Hopefully you can learn something from what I write, either good or bad.

  4. MonsieurStat Says:

    Merry Christmas to you too. Be careful holding short ETFs for long periods of time. There is nothing worse than being right about the market direction and still lose money. Take a look at my blog that discusses this problem with links to a fabulous article that just came out.

    http://monsieurstat.blogspot.com/2008/12/how-to-turn-dogs-into-money-machines.html

    Cheers!
    Stat.

  5. Finance Fanatic Says:

    I agree Monsieur, short etfs can be frustrating in the long haul. It's all about riding the bumps. It is true that these inverse etfs move at varying rates, but profits can still be made. If you would have sold SRS a month ago, like me at the $250, all of sudden it refutes Obergs article. He's just not riding the bumps right and is bitter. I know several, sophisticated institutions who trade these funds. I would not hold them over a year, though.

  6. Anonymous Says:

    Hey FF,

    Happy holidays. Your top ten stocks teaches me two things:

    1) It is a nice idea to own stocks from both sides (short and long) in this volatile market, which I think will continue for a while.

    2) You are not certain about your sentiments. Otherwise, you would have invested all your money in SRS and kept averaging down until you got a great amount of profit. For example, I cannot imagine the whole market going down (resulting in SRS going up), while AAPL or GDX going up too. If the market keeps going down, the gold miners will also get into trouble and may go bankrupt. Which probably makes sense and is wise as I remember you said sometime nobody can be 100% right. Hedging is the key, with an investment idea. Thanks for sharing all that.

  7. Finance Fanatic Says:

    Anon,
    I indeed have hedging in mind while picking these stocks and I also have different time frames within 2009. I plan on being very aggressive with SRS, FXP and EEV q1 and q2 of 2009, and then hope to kick it into gear with AAPL, VMW, and other longs.

    I agree, sentiment is hard to read these days and no one can be 100% right, but these are the ones I feel have the most potential to do well during next year. Happy Holidays to you as well. Thanks for the comment.

  8. sid Says:

    I noticed you like DIG, but worries me is looking at DUG. It's near it's 52 week low and oil is getting killed. It just doesn't make sense to me. If oil were to rise again, wouldn't DXO be a better choice than DIG? Or perhaps USO?

  9. Anonymous Says:

    Hi all,

    I'm also interested about which long ETF I should pick concerning Oil. DXO, DIG, USO, something else ? 1/3 in each ?

    Thank you for your answers.

  10. Finance Fanatic Says:

    Anon,
    Ya, splitting between the three is not a bad idea. I'm going to look into that. I've been tracking USO for a bit, DXO looks prime for buying as well. Good stuff.

  11. trajan Says:

    Hi. merry Christmas. Thanks for the great article. I agree with your top 10 for the most part, however, I am wondering why you would leave out UYM? It seems with Obama coming in and planning to initiate huge infrastructure projects in 2009 this would be a great pick. Also, correct me if I am wrong, but basic materials are usually one of the first things to recover after a recession.

  12. [e] Says:

    Hey guys,

    I love the list. It is simply excellent!! I agree whole heartedly, in all choices with the exception of Apple. It is a personal thing, I just really hate them...however, I do trade them and usually make money. I would never hold them for a long term, I do not think they will be a lasting company, especially when they bank on one man. I know I am in the minority here, but I just wanted to share. Moving on...


    Concerning your other choices which I like very much. I must say that an important fact is being over-looked, all of these stocks are being manipulated. Especially, SRS... take a look at the short positions and you will know what I mean. These bumps as described in a previous post are plain old destructive pot holes. However, if you wait them out it should pay off very well. This is if, and only if the market acts like it should. It isn't though, and the market is being manipulated by the individuals and companies getting these bail-out monies. I think your estimate of going long in late 2009 is the only thing I don't quite agree with. This perpetual market restraint and manipulation is only going to elongate this downward spiral. I think there will be plenty of time to trade all of your list, and being stuck in a long position on any one of those SHORT ETF's wont be bad assuming an excellent target price... I especially like the treasury ETF, haven't seen that one around...

    If you are reading this and don't know what an ETF is, do not trade these until you watch them for at least 1 month. They are ridiculously volatile. My best advice is to look into our(US) monetary system, and then take an investment class on how to read income statements and public company filings. Without this knowledge you will not be able to trade these with an sort of success. However, at the same time it seems like the government has has inversely affected the markets with these ridiculous bailouts, so in the short term these ETF's are a gamble, but not because they are ETF's. Instead because the government is derailing free market corrections. Which we all know is a temporary ploy, but one that will cost us all more and more dearly. A side note: I am a software developer and not a trader, although I do find this very interesting and have been consumed by it in recent months. I hope that one day we all wake up and make the world a better place, without all this nonsense, but until then I will be trading and trying to make money the best way I can - which includes silver, gold, and semi automatics.

    Gluck all - and please look into our monetary system, especially the federal reserve and the M1, M2, and M3 statistics. This will show you how the market really works, and how to really make money. No traders and market guru's needed! Knowledge is power!

    Best Regards,
    [e]




    P.S. Ford is not a good bet. Especially when its largest backer ran today... ugghhh... horrible.

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