Two months into 2015, how do you weigh how the economy is likely to perform this year and pinpoint what industries hold the most promise vis-à-vis investment?
Where to go for Investment Advice
There are some excellent sources of advice and guidance out there for prospective investors. Fisher Investments have an excellent Flickr page that is packed with an abundance of highly informative charts, graphs and infographics to help investors evaluate their options.
Economic Context and Prospects – a Short Overview
The US economy is in growth mode and has been over the last three years, but it’s well below what most people had hoped for (close to 2.4 percent per annum). However, energy prices are now exceptionally low, as is the cost of borrowed funds, both of which will put more money into the bank accounts of businesses and consumers alike. Low interest rates, low inflation, low energy costs and the increasing tendency among businesses to exhaust their surplus capacity are good omens for 2015. Should we see a growth rate of three percent during the year, most people will feel considerably better; modest but steady economic growth over a sustained period is by no means a bad thing.
Where to Invest
The aim, of course, is to build a strong and promising investment portfolio this year. Here are some promising options.
Technology
This may seem counter intuitive at first glance: many tech stocks aren’t paying dividends currently, but strong domestic demand is very likely to improve already strong balance sheets. Some industries stand out as having bucked the trend in terms of growth. Within the technology sector, semiconductor stocks performed spectacularly well during 2014. Soaring by over 28 percent year-to-date, the Philadelphia Semiconductor Sector Index has smashed the S&P 500 (up 13 percent) and NASDAQ (up 15 percent).
Communal may seem a risky option; its performance was underwhelming in 2014; however, there are good reasons for supposing it will have a much stronger 2015. It’s upgrading the base band on its forthcoming Snapdragon 810 processor to deliver download speeds 50 percent faster than previously, which will extend its leadership in cellular baseband technology, and its technology licensing business is exceptionally profitable.
Transportation
If there’s one sector that’s loving the crash in oil prices it’s transportation. Whether you buy individual stocks in world-class companies or basketballs of them through the i Shares Dow Jones Transport Ave (which holds a huge span of transportation stocks in all forms of transport, exposing you to all of them), you’re almost certainly onto a winner.
Chinese Stocks and the Chinese Market
Despite China’s economic falter in 2014, its stocks enjoyed something of a bonanza last year; and it’s set to get better; the Chinese government’s new monetary easing policy has already sent the Shanghai Composite Index to a record-breaking high and it’ll certainly be supportive of stocks.
Companies that are poised to take advantage of the massively expanding consumer market in China are also likely to be good bets: White Wave Foods, for example, owns a 49 percent stake in a new production facility in China, which will open the door to selling its brands there. With 1.3 billion consumers and a burgeoning middle class, that’s an opportunity not to be missed.