Hi everyone
I would like to get some help to find the best futures industries. I know that is complicated and that everyone is going to say that if was that simple I would be the richest man in the world and bla bla bla. I use a combination of technical and fundamental analysis, most people tell you that you should find the best industries and then the best stocks on the top industries but then, the way that they pick the best industries is too technical and to vague for me. Like in the book “How to make Money in Stocks” that says that picking the right industry is half the return that you would get from a stock and then goes by saying pick the best 50 industries that have the best 6 month Relative Strength, then on a very similar book of Stan Weinstein “Secrets For Profiting in Bull and Bear Markets” says that you have to do stage analysis base on the 150 week moving average line.
To be honest if the industry that you select is so important I think that booth explanations are a bit simplistic, also I would like to get in the trend a bit before the industry is already over the moon.
I have been trying to find books about this topic without success, also I have search other strategies base more on fundamentals but they are all pure bottom up and they just compare the stocks with the industry and nothing else.
Please heeelllllllpppppppppp
Categorized | Affiliate Marketing 101
Help Picking The Best Industry To Invest In?
Posted on July 13, 2011.
Just to let you know how difficult the problem is:
Suppose that I had a sector rotation model that gave me a way of out-performing the S&P by 2%/year on an unlevered basis and I potentially needed to trade every day. Most people wouldn’t be all that wild about readjusting their portfolios every day for a measly 2%/year over their effortless Vanguard S&P index fund.
However, I can take that model, lever up 10x (if someone wants to tell me the maximum allowable is 2x they don’t know what they are talking about), and short S&P futures contracts against the notional size of my portfolio. Then I have something that I expect to return 20% per year with (I suppose) no correlation to the S&P 500. That’s 20% of alpha.
If you give me such a model, I can sell billions and billions of dollars of it in the hedge fund space. Suppose that I sell $10B (I couldn’t but I know people who could), then I expect to make 2% mgt fees + 20% incentive fees on a 20% return on $10B. That means I make 6% of $10B = $600,000,000 in my first year and more in subsequent years.
I think that you won’t find simple meaningful answers to this problem.
Read on the business cycle.
In the business cycle, there are 4 phases. Currently we are in phase one transitioning to phase two. That part of the cycle is usually led by industrials. Once you read about the cycle you will understand why. Additionally, those industries that support the initial phase of the cycle are good bets, transports and packaging. Have to get the product to the customer. Currently, the dow transports are pushing ahead which means industry is starting to make widgets, buy raw materials, and ship in those materials, parts and ship out widgets and product. That implies further we will not have more contraction in GDP and should press on to target or above target growth.
Hi F L,
Trying to find the best future industries and sectors can be a bit tricky, but there are places that you can go to check out the sectors that exist. A good one in particular is Yahoo Finance’s site that I’ve included in the source below. An excellent way is to use a software package that can sift through the indices and sectors for you. You may also find sources available on thinkorswim (a broker) and through Incredible Charts of use too – I’ve included those links below for you as well.
Hope that helps!! Cheers!!
I am glad that you recognize that what you are asking is a very complicated and difficult question to answer. It lets me know that you will do your own individual research and will not blindly follow the myriad of suspect answers you will likely get from this forum.
Here are my two cents;
Look around you. What trends do you see in your everyday life that you suspect will continue for the next 5 years or longer. What products and companies are you personally familiar with that have changed the way we live, the way we interact with each other, the way we do business. I think you are thinking of this problem in far too abstract a sense. You are a consumer and have insight into a variety of industries already. I wrote and article that discusses this if you are interested;http://familymanfinance.blogspot.com/201…
That doesn’t really answer your question though does it? I think E-Commerce and in particular the way we pay for goods (credit cards) is an especially attractive and long term trend that you should look into. There are the obvious players like Amazon.com of course but they are already riding pretty high. Visa is another that I think is a great long term play.
Shorter term – I like the revival of the American Automakers (Ford especially), I think Southwest Airlines acquisition of Airtran will be highly profitable and I am a big fan of IMAX at its current price.http://familymanfinance.blogspot.com/201…