Which sector ETF would you buy tomorrow and hold for 12 months?
Why this sector? Why now? Why do you think it will perform well over 12 months relative to other sector ETFs?
Best Answer
202 points
Lobo answered one year ago …
Warning: Empty your mouth of all extraneous liquid to avoid that sudden expulsion based on astonished disbelieve. Ready?
My choice is the financial services sector!
Okay, I know I am something of a contrarian by nature, yet I submit that the sector is generally beaten down. I see little more downside risk by buying in now. The key words in the question for me are 'buy and hold for 12 months.' There are still some problems, but the serious problems are becoming more isolated to specific entities. Overall, progress is being made. If 12 months isn't enough time to reap fine profits I suggest you will be well positioned to benefit from the sector's eventual recovery. And a well placed stop order should provide comfort in case this contrarian is actually suffering from some delusional ideation.
Answers
4085 points
EthanR answered one year ago …
I would buy the precious metals sector, either gold (GLD) or silver (SLV). Both have had nice corrections from their highs and are near support levels. A weak economy and high oil and food prices will continue to dog the dollar, and lead to an increase in the price of precious metals. Very few sectors will perform well if the economy remains weak, the dollar weak, and oil and commodities are expensive. Oil, food, and commodity ETF's will also do well, but if I had to pick just one sector it would be the precious metals.
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3963 points
MNSL answered one year ago …
I think food sector (consumer staple sector) including animal production sector will do well for next 12 months due to higher demand and prices world wide. In addition during inflation this sector will perform better than other sectors.
In addition I like following sector for next 12 months.
PowerShares DB US Dollar Index Bullish Fund (UUP)
Sector more exposure to frontier market
Agriculture Sector
3963 points
MNSL answered one year ago …
Lobo I partly agree with you.
We will see rebound in the financial services sector in next 18 months once present sentiments disappear and stabilize money and credit market in the beginning of next year.
Interest rates also will come down in most countries such as New Zealand, UK and other European. Countries. Credit market and liquidity will improve. Once this happen Banks will have more opportunity to lend money and investment will improve. Currencies in these countries will come down against US Dollar. As a result we will see lower commodity prices and lower inflation in the world as most commodity trading is based on the US dollar.
There will be great opportunity for well managed financial companies in the financials sector in next 18 months and beyond due to collapse of many financial institutions world wide.
202 points
Lobo answered one year ago …
Thanks, MNSL. My first thought was that you were about to agree with my "delusional ideation" remark. After today' further bad big bank news, who could blame you?!
Yep, if the question had the time frame of 18 months or 2 years, instead of 12 months, I think we'd definitely have a winner.
3963 points
MNSL answered one year ago …
Lobo thank you for your new reply.
I think we should do more research to identify outstanding financial institutions world wide from now onwards. There are some great opportunity in smaller banks and well managed financial companies worldwide even now.
I think it is time to avoid some big banks who deals complex derivatives such as interest swap and commodity derivatives etc now. In addition some of these banks (World wide) are not concentrating on their core businesses and they are trying to take extremely speculative steps and have over-diversified into other areas.
We do not know where they will end up this time.
If we can identify outstanding financial institutions with great potential then it is time to accumulate those stocks gradually in next 02 years to get long term above average returns.
904 points
jillybeansisme answered one year ago …
EWZ Brazil ETF because they are a major exporter of coffee and sugar. Coffee appears to be having a bumper crop this year, which is good for their exports and sugar now has use in ethanol production thereby increasing its potential even further.
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