Which Sector to Invest In Right Now?

[OhSoClose]

DW and I have some cash available and are looking to invest in a mutual fund that buys equities within some sector of the US economy. Our investment horizon is five plus years.

Given the weakness in the economy, and the freefall in the stock market, what sector do you think has the greatest upside potential over the next five to seven years? [Note: If I could invest in currency printing presses, I would, but not sure you can do that. I am also encouraged by Ziggy's personal pledge not to buy any more stocks this year].

Seriously, I thank you in advance for your input!

[travelover]

Seriously, with an investment horizon of only 5 years, I would not invest in stocks.

[Dawg52]

If I could roll back my investing years, I wouldn't invest in stocks period. It's a scam.

[REWahoo]

Quote:

Originally Posted by Dawg54 If I could roll back my investing years, I wouldn't invest in stocks period. It's a scam.

If you could roll back your investing years, why on earth wouldn't you invest every penny you had in stocks, then sell everything in Oct of 2008? Seems a shameful waste of time travel to do otherwise.

But I suppose repeated concussions could impact your thinking...

[Dawg52]

Quote:

Originally Posted by REWahoo If you could roll back your investing years, why on earth wouldn't you invest every penny you had in stocks, then sell everything in Oct of 2008? Seems a shameful waste of time travel to do otherwise. But I suppose repeated concussions could impact your thinking...

You probably meant 10/07, but I get your point. No, my thinking is just fine. Stocks are for gamblers. I just bought into the 'investing' theme. Might as well go to a horse track and try to pick winners off of a stat sheet. Basically the same thing.

[ziggy29]

Quote:

Originally Posted by Dawg54 You probably meant 10/07, but I get your point. No, my thinking is just fine. Stocks are for gamblers. I just bought into the 'investing' theme. Might as well go to a horse track and try to pick winners off of a stat sheet. Basically the same thing.

Plus, sometimes the race track has dollar hot dog and dollar beer night...

[OhSoClose]

Quote:

Originally Posted by travelover Seriously, with an investment horizon of only 5 years, I would not invest in stocks.

Sorry, I wasn't clear. This would only be a small part of my portfolio, and I could leave it invested for many more years than five if necessary. I will be doing other research, just looking for ideas from the members of this board.

Thanks.

[ziggy29]

Guns. Ammo. Alcohol.

Oh, wait -- you meant which *stocks* to buy...

[Rustic23]

I would go for big oil. When oil goes up Exxon makes a profit, when gas goes up Exxon makes a profit. Does anyone really think either will go down significantly in the next 5 years?

[jug]

Apples and pencils. No need for guns and ammo, you could end up shooting yourself.

Also, get a cookbook on how to make a nice soup out of shoe leather.

Jug, brother can ya spare a buck......

[dex]

Vanguard High Yield Corp Bond Fund in your Tax Deferred Account.
Look at the chart. It held up very well during this last decline. You will get high interest and capital appreciation - some day.
Average into it.

[samclem]

Quote:

Originally Posted by dex You will get high interest and capital appreciation - some day.

And, this looks like the new way to become a stockholder--buy bonds.

[ziggy29]

Quote:

Originally Posted by samclem And, this looks like the new way to become a stockholder--buy bonds.

As Homer Simpson would say, "it's funny because it's true"...

[ratface]

In hard times people scale down on foodstuffs. Sales of cereals typically do well. I don't have any specific recommendations but find out who is making most brands of cereal, macoroni and cheese, hamburger helper kind of stuff.

[HFWR]

IOW, consumer staples...

XLP: Holdings for CONSUMER STAP SPDR - Yahoo! Finance

[Poundkey]

I agree with Rustic, and would add that grains are in a similar position.

[Grep]

Why would you think that any of us knows what to buy? No one can know the future.

Why would you think that investing in one sector is a good idea? What if it's exactly the wrong sector to buy. For example, consumer staples was mentioned. That sounds good in a down-turn, and indeed it has gone down less than the general market. But what if yesterday was the market bottom, and say financial stocks stage a gigantic bull run over the next year? There's just no way to know, and investing in a single relatively narrow sector is little more than gambling.

If you are going to invest in the stock market, then I'd recommend VTSMX, Vanguard's Total Stock Market fund. A rising tide lifts all ships.

If you wanted to bank on the entire world instead of just the US, you could go with VTWSX, but keep in mind that the U.S. is only 40% of the world.

If you were crazy enough to want to focus on a high-risk, high-return sector, I'd still suggest spreading your bets around. Pick a few that have suffered huge losses and huge volatility that should do well provided we emerge from this downturn whole, and roll the dice: VFH (financials ETF - talk about high risk/high return!)? VGSIX (REITs)? VGENX (Energy, though I'm not as hot on that). For the very long term, it seems to me that VEIEX (emerging markets) has a lot of growth potential compared to developed countries.

In the end, you probably should just have a simple, broad portfolio, e.g. VTSMX plus VFWIX plus VBMFX in some proportion that suits you.

[ziggy29]

Quote:

Originally Posted by Grep In the end, you probably should just have a simple, broad portfolio, e.g. VTSMX plus VFWIX plus VBMFX in some proportion that suits you.

Pretty good for simplicity, but personally I'd break up my bond allocation into 50% VBMFX and 50% VIPSX (TIPS).

[Bestwifeever]

It sounds like you already have a portfolio with allocations, since this would be a small part of your total portfolio? You could just distribute this according to your existing allocation.

[Grep]

Ziggy, I agree that's better.