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With the Dow confidently over 12,000 for the time being, what are some sectors to buy even if we are near a top in the index? That question has to be on everyone's mind right now. Once again, we see that the bulls outweigh the bears even with the job market remaining "anemic," as CNBC put it this morning. Volume has not risen exponentially during this rally, but that doesn't mean there has been a change in sentiment at all. The overall market is still bullish and there are many buyers even at these levels. While I think the market is not sustainable at all at these levels, and we will see a healthy pull back before the second quarter, few investors like to sit on their cash when the market is rallying. So if you feel the need to go with the flow, here are some sectors to watch for strong fundamentals and future performance:

An energy favorite

Definitely look into anything of quality that produces and sells natural gas. Natural gas remains very undervalued relative to the price of crude. It's currently trading around $4.40 on the Nymex. November looked like a good month to get into natural gas and I think we still have strong fundamentals for this corner of the energy market.

If you're looking to put up $10,000 in natural gas plays, I'd put down about 30% in high-quality natural gas company stocks at current prices, and balance the remainder on dips in oil prices or substantial corrections in the Dow of two percent or more.

Natural gas will still suffer systematic risk when the Dow comes down from these levels. But energy overall should separate from the broad market and continue to drive to higher prices due, in part, to higher emerging market demand for oil, lackluster oil discoveries and a continued push for cleaning burner fossil fuels, of which natural gas is the only alternative despite its own regulatory and environmental drawbacks.

It has been estimated that because of cutbacks in oil exploration we could see a 20% drop in oil reaching the export market. The Chinese and Indian economies continue to have an ever-increasing demand for petroleum products, so at some point demand will outstrip supply. It is not a question of will this happen, but when. As this plays out, demand for natural gas will increase. 

Buy commodity funds

I would advise Main Street investors to buy this sector through a high-quality ETF, mutual fund or index fund. The commodity bull for metals could last another decade, according to analysts at India-based Kotak Commodity Research.

Serious money can be made in this sector of the market, but the average investor has to spread his risk. When you see copper prices going through the roof and talk of shortages, it's not the time to buy copper. Copper prices are forecast to rise, but individual investors are better off holding a basket of metals or mining company funds in their portfolio, and holding it over five years or more. There are plenty of ETFs and mutual funds that target metals and mining stocks.

Here are some of my favorite ways to get exposure to the underlying base materials of the sector.

1. iShares S&P Goldman Sachs Commodity Index ETF (NYSEARCA:GSG)

Market cap: $1.7 billion

Avg volume: 532,000

Last 6 months: +14.78%

Beta: 0.81

Invests in commodities linked to the Goldman Sachs Commodity Index.

2. ELEMENTS Rogers International Commodities Index ETN (NYSEARCA:RJI)

Market cap: $634 million

Avg volume: 483,000

Last 6 months: +22.16%

Beta: 0:81

Invests in exchange traded notes linked to commodities in the Rogers Commodity index, a broad based commodity index set up by commodities bull and guru Jim Rogers.

3. PIMCO Commodity Real Return Strategy mutual fund

Assets: $18.5 billion

Last 6 months: +17.4%

A nine-year-old mutual fund investing in commodity futures, heaviest weighting in energy and grains.

There are also many energy-specific ETFs and mutual funds that invest in equities.

Buy gold and silver

The public on balance has not entered the precious metals bull market. Main Street has fled the stock market and piled into the bond market. The bull market in precious metals will be sustained when the public investor flees bonds because of rising interest rates and accelerating inflation, and recognizes the value of gold and silver as an inflation hedge and a storage of wealth .

The true price of gold adjusted for inflation since 1980 should be over $2,400 an ounce and silver well over $100. Both of these markets continue to sell at a discount. I would own one-third bullion, one-third bullion coins and one-third of the highest quality miners. Consider adding to all positions on any price correction in the metals.

The Dow at these levels is "buyer beware" territory.

I would also adjust all stops on any further advance in the Dow, as this market could be broadsided by bad news coming out of nowhere at anytime.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Commodity ETFs for Dow 12K