360° Coverage : A Simple Guide To Investing In 2014

2 Updates
A Simple Guide To Investing In 2014
Photo Credit: Forbes Business

A Simple Guide To Investing In 2014

Jan 6 2014, 11:37am CST | by

The New Year has barely arrived, and yet 2014 is already shaping up to be an exciting one if you have any economic interest in the markets. As we begin to think about how to deal with 2014 from an...

Filed under: news

 
 
 

41 weeks ago

A Simple Guide To Investing In 2014

Jan 6 2014, 11:37am CST | by

The New Year has barely arrived, and yet 2014 is already shaping up to be an exciting one if you have any economic interest in the markets. As we begin to think about how to deal with 2014 from an investment perspective, think of these current concerns:

A new Federal Reserve Chairperson this year that has signaled a market friendly style; a stock market with very strong performance that is bound to raise concerns about future returns; and  there’s also the never-ending debate about whether the U.S. economy is really getting better at a consistent clip.

We all know that it is absolutely impossible to predict what will happen this year to interest rates, stock prices and your portfolio. (Let’s have a show of hands for those of you that foresaw that the S&P 500 would close out at 32%.) But one thing we will find interesting, if not unprecedented: I think there will definitely be a significant change of sentiment as 2014 moves into full gear.

Investors that sat on the much-referenced “sidelines” with their cash last year woke up January 1 very disappointed that they did not participate in a great rally. As a result, I don’t think they will remain inactive for the bulk of this year.

So let’s take a look at how an optimist or a latecomer to the market might view the year’s investment opportunities.

Stocks:  Sure, there are people that consider today’s market overvalued by P/E measures. But those comments tend to be generalizations about the popular indexes such as the S&P 500, not individual stocks. When I look at my portfolio of about 25 stocks, there are still several stocks that analysts’ estimate earnings growth of 20% or more for the coming year. I’d say that’s a pretty attractive prospect, especially if most of these stocks are trading at a forward P/E of around 20.

So you have to take the valuation hype on a case-by-case basis. That’s how you can make money in stocks this year: finding the stocks whose earnings growth rate is in line with its P/E multiple.

Two stocks I like that fall in this category are HSN and Las Vegas Sands. 

HSN’s Home Shopping Network segment is the main contributor to the company’s revenue, and the company continues to improve operating margins as we enter 2014. Likewise, Las Vegas Sands’ gaming market, targeted at China so far, is exploring expansion possibilities in Japan. It looks promising because Japan may permit casinos as it plans to host the 2020 Olympics.

Special Offer: Where should you invest in 2014? Download the new free report 12 Stocks To Buy For 2014 for ideas from top Forbes advisors.

Bonds: Almost everybody these days is thinking that bonds are finished. I’ve been a writer of this column for over two years, and by now you should guess how I respond to the so-called “consensus thinking”—especially when it concerns market matters.

Just because interest rates are most likely to move higher than lower in the current environment, one should not simply mass exit the asset class—especially if everyone (including the proverbial “shoeshine kid”) is chanting that mantra. The fact that everybody is aware of bonds is unusual. Bonds are hardly ever discussed in the general media, since stocks are normally far more interesting for some reason. This is another reason to be careful about changing the fixed-income component of your portfolio in response to the majority opinion, because atypical crowd awareness can signal a behavioral malfunction in logic.

To ground yourself, there are several Web sites that have models showing how certain laddered bond portfolios will fare when rates move up. My firm has a simulator that allows one to stress test a portfolio based on a rising rate scenario, for example. In general all the quant models show that, given a slowly rising rate scenario, a laddered account should do just fine as long as you don’t cash out, and keep investing that coupon income. So let the new Fed Chairperson arrive with all the press fanfare about expectations—it shouldn’t really matter to a long-term investor that much!

Alternatives: Have you noticed the current spin on the underperforming hedge funds out there?  It used to be that hedge funds were marketed as exclusive, best of breed managers that offered the potential for stunning returns, with a certain air of exclusivity. But most hedge funds have underperformed recently. How do those managers explain this? I guess most of us simply did not understand the managers’ objectives of targeting “low volatility.”  I wasn’t aware of that until last year, and I’m not sure that many other investors were, either.

By corollary, does that also mean any hedge fund that has beaten the S&P 500 by a large margin has missed its investment objective? I think you get my point. Leave it to the experts to vet and recommend alternative strategies, because it’s a very fragmented market that deserves full-time scrutiny in order to be approved in your portfolio.

As we engage the first full trading days of 2014, I’m optimistic that those with a rational, disciplined investment plan will be quite satisfied in eleven months—regardless of what the Fed does along the way.

Source: Forbes Business

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedie ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Spanish nurse cured of Ebola
Madrid, Oct 21 (Xinhua) Spanish nursing auxiliary Teresa Romero was pronounced cured of the Ebola virus disease according to World Health Organisation (WHO) guidelines after the results of a second test confirmed Tuesday that she no longer had the virus in her blood.
 
 
Clinical trials of Ebola vaccine start Nov 1 in Switzerland
Geneva, Oct 21 (IANS/EFE) The World Health Organisation (WHO) announced Tuesday that it will begin clinical trials Nov 1 in Switzerland of one of the two anti-Ebola vaccines currently under development.
 
 
Colombia to launch world's first floating gas liquefaction plant
Bogota, Oct 21 (IANS/EFE) The world's first floating gas liquefaction plant is due to begin operating next year off the coast of northern Colombia under a pact between Canada-based Pacific Rubiales Energy and Belgian shipbuilder Exmar.
 
 
Paralysed man walks again after pioneering cell therapy
London, Oct 21 (IANS/EFE) A paralysed man has been able to walk again after therapy that involved transplanting cells from his nasal cavity into his spinal cord, the BBC reported Tuesday.
 
 
 

Latest from the Network

Keira Knightley was 'a goody two-shoes'
Keira Knightley was ''a goody two-shoes'' when she was younger. The 29-year-old actress claims she was a ''boring'' well-behaved child and never skipped school because she didn't want to upset her parents or teachers....
Read more on Celebrity Balla
 
Kat Dennings is in love with Kim Kardashian
Kat Dennings thinks Kim Kardashian's butt is ''amazing.'' The '2 Broke Girls' actress was ''very nervous'' when the 'Keeping Up with the Kardashians' star filmed a cameo for the show's 80th episode and was too shy to...
Read more on Celebrity Balla
 
Taylor Swift doesn't 'need some guy' for inspiration
Taylor Swift is ''figuring out how to cope'' with life on her own. The 'Shake It Off' hitmaker hopes her upcoming album, '1989,' will prove she doesn't ''need some guy'' to help her ''make a great record'' or to feel...
Read more on Celebrity Balla
 
Sarah Hyland is 'great'
Sarah Hyland says she is ''great'' after obtaining a restraining order against her ex-boyfriend. The 'Modern Family' star is happy to be focusing on her career again after a judge recently granted her a three-year...
Read more on Celebrity Balla
 
India re-elected to UNHRC for two years
United Nations, Oct 21 (IANS) India was Tuesday re-elected to the United Nations Human Rights Council (UNHRC) for the term 2015-2017 in a keenly contested election in the UN General Assembly in New York. Other...
Read more on Politics Balla
 
Spanish nurse cured of Ebola
Madrid, Oct 21 (Xinhua) Spanish nursing auxiliary Teresa Romero was pronounced cured of the Ebola virus disease according to World Health Organisation (WHO) guidelines after the results of a second test confirmed...
Read more on Business Balla
 
Gurdwara closed in Belgium
Brussels, Oct 21 (IANS) The mayor of the town of Vilvoorde in Belgium, Hans Bonte, has ordered the closure of the local gurdwara, Guru Nanak Sahib, for one month. Belgian media Tuesday charged that the Sikh temple "...
Read more on Politics Balla
 
Air strikes kill 28 militants in Pakistan
Islamabad, Oct 21 (IANS) At least 28 militants were killed when the Pakistani army launched an air strike in the country's northwest tribal town of Datta Khel Tuesday, military said. In a statement, Inter Services...
Read more on Politics Balla
 
Report reveals large-scale torture in China's 'Black Jails'
Beijing, Oct 21 (IANS/EFE) The use of hotels and factories as clandestine prisons where thousands of people -- mostly women -- are tortured to prevent their complaints against the government from coming to light has...
Read more on Politics Balla
 
Clinical trials of Ebola vaccine start Nov 1 in Switzerland
Geneva, Oct 21 (IANS/EFE) The World Health Organisation (WHO) announced Tuesday that it will begin clinical trials Nov 1 in Switzerland of one of the two anti-Ebola vaccines currently under development. WHO Assistant...
Read more on Business Balla