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Sectors to Monitor While the Nation Hangs from the Fiscal Cliff

December 31, 2012 | About:
It’s the last day of the year and solutions pertaining to the fiscal cliff disagreement remain far and unseen. What we are seeing, however, is the continuous outpouring of commentators and pundits reflecting on the entire debacle, inflating into one big ongoing extravaganza.

Amid all the back-and-forth in Capitol Hill, a common curiosity for investors is where to place their bets for the upcoming year. Do you invest in REITs, financials and ETFs? Do you slash your healthcare and tech stocks?

As Forbes highlighted about a month ago, small-cap Guru Chuck Royce of the Royce Funds was quoted to avoid utilities, despite attractive dividends. “There’s a speculative bubble in yield. Utilities have been bid up for yield only, but they generally are not high-returning companies,” he said.

From the same segment, John Buckingham of Al Frank Asset Management similarly noted that the utilities sector, along with consumer stocks, though having done well in 2011 and 2012, were not left with many good values. “We are not finding a lot of inexpensive stocks in those sectors. Valuations are generally tilted more toward the high end of their historical range and above the metrics associated with the average stock in our broad-based Russell 3000 benchmark,” he said.

Sometimes, the accumulation of media coverage could make it daunting for a value investor and his or her research. Luckily, GuruFocus offers useful tools to help in their quest for potentially promising stocks to invest in.

Besides tracking the latest investor trades on GuruFocus Real Time Picks, the GuruFocus Sector Trends reveals which sectors Gurus are buying new stocks, and which sectors they’ve sold out the most, to get a better sense of actual buy/sell sector activity, aside from information heard through the grapevine.

The data used in the trend charts are the most recent, going back only as far as the previous quarter.

As Sector Trends are revealing now, banks and the technology sectors seem to be the current leaders as far as where Gurus have purchased stocks as new buys the most, with the retail and industrials sectors showing the next two largest chunks of Guru buys. The same four sectors appear as results for the areas where Gurus have chosen to completely sell out their shares the most. Below is a preview. (Tip: Click on the number of either Buys and Sells and it gives a full list of Gurus who have purchased in that sector recently.)

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Because of the looming uncertainty in the U.S. market, investors, such as Jeremy Grantham of GMO LLC, have been seen advising to avoid U.S. stocks, but if one must, to stick to only “big, safe brand names with rock solid franchises,” like Johnson & Johnson (JNJ), Coca Cola (KO) and Microsoft (MSFT). Grantham also likes emerging market equities, as well as Japanese and European stocks.

As we plunge into the new year, international stocks can be a good thing to monitor. GuruFocus International Picks allows members to see the latest international stocks that the best investors are buying and selling, allowing to screen by different countries. Similarly, Geographic Trends reveal the latest international trading patterns by Region and Country.

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Current data from the Geographic Trends chart shows that besides the U.S., Asia comes in second with the most number of recent buys, but Europe comes in second with the most recent sells.

These are just some of many ways GuruFocus research tools can aid you in generating 2013 stock ideas. GuruFocus wants to wish you all a Happy New Year, and also, Happy Stock Picking!

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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