Industry Ranks March 2012: P&C Insurers, Reinsurers Look Cheap

 |  Includes: AGG, BND, IAK, KIE, PIC
by: David Merkel, CFA

I’m working on my quarterly reshaping — where I choose new companies to enter my portfolio. The first part of this is industry analysis.

My main industry model is illustrated in the graphic below. Green industries are cold. Red industries are hot. If you like to play momentum, look at the red zone, and ask the question, “Where are trends under-discounted?” Price momentum tends to persist, but look for areas where it might be even better in the near term.