Best Stock Sectors for 2010
Most of us realize that the economy in the US as well as globally encountered a great deal of instability. This was especially true in numerous financial markets such as those involving foreign currencies, stocks and bonds, and other types of investments. Suffice it to say, many investors were reluctant to play any of these markets as the element of risk proved to be a huge deterrent. But what about 2010? What does the picture look like for the balance of the year where investing in the stock market is concerned?
Towards the end of the 4th quarter in 2009, UBS Wealth Management has basically said that the best advice would be to stick with investing in what are called “procyclical” investments during 2010. These are investments which gain as the economy is improving and this indicates that UBS feels that the economy will recover sufficiently so that smart investors will benefit through the balance of the year ahead.
Stock sectors to pay attention to
Although there are numerous best stock sectors for 2010, there are 3 that remain high on the list and are worthy of a stock market investor’s attention:
- Energy
- Materials
- Technology
Granted, these three stock sectors have been receiving considerable attention in recent years. However, these are considered to be the three primary stock sectors to pay serious attention to.
The reason for such confidence and strong feelings towards these three stages is the fact that it has been estimated that at least 50% of the Economic Stimulus Package will be spent in 2010. Nearly $400 million will be going back into the economy. When you combine that fact with interest rates that have remained relatively low, this bodes quite well for those three sectors above.
Current economic trends that can impact stock sectors
What is not going to happen?
- The US dollar will not collapse
- Inflation will not be a significant problem
- A municipal credit crisis is not going to occur
What might happen?
- Another high-dollar stimulus package may be passed into law
- Crisis levels may arise in the commercial real estate sector
- The “Fed” may continue to remain on hold
What will happen?
- Economic recovery is going to continue
- More geopolitical threats are going to emerge
- Taxes will inevitably rise
Other stock sectors to keep a close eye on
Where the best stock sectors for 2010 are concerned, there are several others that should be watched closely in addition to the 3 that were mentioned above. These are broken down by sector and include the following:
- Basic industries
- Capital goods
- Consumer durable goods
- Consumer goods
- Non-durables
- Consumer services
- Finance
- Health care
- Public utilities
- Transportation
If you are still trying to position yourself in a financial and investment position, you should consider the above information prior to making your final decision on which sector or sectors that you want to invest in.