Stock Allocations: Looking for the next Bull - Need your Advice

[chinaco]

I am looking at the carnage and thinking now is the time to invest (or very soon).

Since I am near ER (in 3 years)... I am not going to sell my fixed and invest in stocks with that money because I would have to delay ER.... No one knows how long it will take for the stock market to recover. The last time it took 7 years for the DOW and S&P to hit the same level (not including inflation).

However, I have been rebalancing my equity holdings (mostly in indexes) to get a little more international exposure and figure now might be a good time to do so... but perhaps there are better moves.

International Stocks did great the last several years, so did Reits... But looking forward, things could be different.


My question to the forum is: What Markets (domestic or Foreign) and or Capitalization Size (Mega, Large, Mid-cap, Small-cap, etc.)... or for that matter Sector (financial, energy, retail, etc..) do you think will blast out of the bear and lead the next Bull?

 

[Dawg52]

I am looking at the carnage and thinking now is the time to invest (or very soon).

Since I am near ER (in 3 years)... I am not going to sell my fixed and invest in stocks with that money because I would have to delay ER.... No one knows how long it will take for the stock market to recover. The last time it took 7 years for the DOW and S&P to hit the same level (not including inflation).

However, I have been rebalancing my equity holdings (mostly in indexes) to get a little more international exposure and figure now might be a good time to do so... but perhaps there are better moves.

International Stocks did great the last several years, so did Reits... But looking forward, things could be different.


My question to the forum is: What Markets (domestic or Foreign) and or Capitalization Size (Mega, Large, Mid-cap, Small-cap, etc.)... or for that matter Sector (financial, energy, retail, etc..) do you think will blast out of the bear and lead the next Bull?

One stock. BUD. Enough said.

 

[bigla]

Yes

 

[dex]

this is my allocation of mutual funds - excluding cash
8.50% Value Index 9.50% Wellesley Income 8.75% Emerging Markets Stocks 19.00% High Yield Corp 3.50% Reit Index Fund 20.25% FTSE all world Ex Us 9.00% Mid Cap Value Indes 9.75% Small Cap Value 6.50% Seclect Nat Resources 5.25% Emerging Bonds 100.00%

I haven't come to my final plan for future investing.
I am thinking of puttin $ into high yield and wellesly then taking the dividends from the bonds and investing them in the equities.

 

[chinaco]

After the Tech bubble popped the tech sector has still not recovered fully... and the NASDAQ will probably not get back to its former high for years. After the tech bubble, it seemed that foreign stocks did very well (possibly because of the weak U$D). Small caps seemed to perform really well also. Large caps crawled back to their former high.


Any insights would be helpful. For example... have foreign stocks had their day in the sun? Will the U$D recover and Domestic stocks be king? What % would you recommend in foreign stocks vs domestic and Foreign Bonds vs Domestic?

 

[dex]

Chinano,

Now would be a good time to buy (average in) foreign stocks if you have a long term plan- several years. They have been beaten up & the dollar is strong - buys more. Also, foreign countries have fast growing populations and manufacturing will continue to move out of USA and Western Europe.

I wrote this in another post:
Here is good news - Foreign travel should become less expensive.
The dollar should get stronger - interest rates are now not in sync.
The US Fed rate was lower than others - dollar weak
The others will be lowing their interest rates - dollar gets strong
The recession will end in the USA first - fed will raise rate - dollar gets stronger because the others will not at the same time as the US - they don't want to risk derailing their recovery.
Buy the euro when it is close to parity with the dollar - they will begin to raise rates - and the dollar rates will remain constant.

 

[DblDoc]

My crystal ball remains cloudy so I just continue to buy a diverse set of index funds covering all the bases. While they are highly correlated currently as we come out of this nose dive they won't be.

DD

 

[Animorph]

I've been thinking small and foreign would be best, since that's what I've had to rebalance into lately. However, it seems likely that foreign had run up a little more than US stocks prior to the bear, and I would think the US might lead a recovery and the dollar will strengthen.

I'm a little overbalanced in a few assets due to the limitations of DW's 401k, but otherwise I'm sticking to the normal AA as closely as I can.

 

[FinanceDude]

Oil is a buy now. So are consumer durables (PG, BUD, KFT, etc)

Careful with international, I am trimming my exposure there other than Brazil.......

 

[Marquette]

Careful with international, I am trimming my exposure there other than Brazil.......

So you're going for a Brazilian on everything other than your Brazil?

 

[al_bundy]

tech always leads and the others follow later on

 

[chinaco]

I am a little overweight in Domestic Large Caps.

It looks like the Domestic large caps are holding up better than international indexes I am in (by a few %). But I suspect the difference in valuation is because of the strengthening U$D.

Still as the U$D strengthens, I view it as a good time to invest internationally. However, one could have made a similar observation about the tech sector after the last bear. Techs have done ok but except for a few bright spots it was only so so.

The effect of artificially low (Fed) interest rates (for years) has caused investors to chase returns.

Do you think that one the economy corrects the Fed will raise rate to a more normal level and not keep them depressed?

 

[jIMOh]

We use sector funds in my wife's Roth and do our best that the allocation mirrors what is everywhere else (45% large cap, 15% mid, 15% small, 15% foreign large and 10% foreign small/emerging markets).

In wife's Roth, all 25% is in emerging markets, including a 10% stake in Africa/Mid East.
In wife's Roth we are overweighting the purchase of financials and also overweighting tech. We still DCA into other sectors too (Healthcare, Energy, Value, Growth). Financial and tech have 4X the deposit amounts of the other DCA sectors.