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5 Things Investors Should Prepare For In 2021 And 2 New Stock Ideas

Mar. 09, 2021 1:37 AM ETAMC, BWA, CCL, CI, CUK, EOG, META, GLD, MRK, PFG, PPLT, QQQ, SPY, TROW, TSLA37 Comments


  • It is wise to have one's portfolio positioned for many different scenarios in 2021.
  • In this article, I share 5 things I've prepared for my portfolio, given the backdrop of an uneven economic reopening around the world, and further stimulus in the US.
  • I also review the 12 ideas I shared a few weeks ago, and share two more individual stock ideas in this article.
  • I do much more than just articles at The Cyclical Investor’s Club: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »


After a great 2019 and 2020, 2021 has been off to a good start for my stock portfolio, but when I observe other investors and read other stock writers, I see a lot of blanket extremism. There are crypto extremists who think bitcoin is the greatest investment opportunity of our lifetime and that it can only go up; there are innovation extremists whose portfolios are full of the stocks of recent IPOs that have no earnings; then, there are extremists in the opposite direction who are holding excessive amounts of cash and long-term bonds; and there are also extremists of the indexing variety who buy index funds with no clue about the valuation of what they are buying.

While some of these investors will end up doing okay over the long-term, I think that over the course of the next economic cycle, I expect all of these investors will underperform investors who carefully select individual stocks of quality businesses while they are trading at reasonable prices and hold them until they become expensive or the business quality declines.

About three weeks ago, on February 11th, I published an article titled "There Are Bubbles But Cash Is Not The Place To Be, Here Are 10 Stocks To Buy Now," and in that article, I shared more than 10 ideas I thought were worth buying. The point of the article was that many parts of the market were at extremes, but there remained opportunities still worth buying for the medium and long-term. I want to take a moment here to examine the returns of those ideas and compare them with the returns of the market indices over the past few weeks.

Above are the returns of Invesco QQQ ETF (QQQ) and SPDR S&P 500 Trust ETF (

If you have found my strategies interesting, useful, or profitable, consider supporting my continued research by joining the Cyclical Investor's Club. It's only $29/month, and it's where I share my latest research and exclusive small-and-midcap ideas. Two-week trials are free.

This article was written by

Cory Cramer profile picture

Cory Cramer is an award-winning political scientist and a long-only cyclical investor capitalizing on market cycles. He has been investing since the 1990s and still invests his own money in the companies he writes about.

Cory leads the investing group The Cyclical Investor's Club where he shares his unique approach to estimating the fair value of stocks by capitalizing on downcycles for undervalued companies. He teaches 4 unique cyclical strategies, offers a master valuation spreadsheet, and is available to answer any questions via chat or direct message. Learn more.

Analyst’s Disclosure: I am/we are long EOG, MRK, CI, PPLT, VLO, HFC, PSX, BWA, PFG, TROW, FB, ANTM, GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I recently took profits in PBCT after their buyout offer. I'm long all of my other suggestions.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (37)

Fine article that I agree with all the way.

Only thing I might add in a stick-in-the-mud fashion is that stocks do not need a Recession to correct 15 to 30%, and I have witnessed it many times.

Appreciate all your good work, and the comments are very solid also - Thanks.
Cory Cramer profile picture
@SeekingTruth Thanks. Very true about not needing a recession. I think that is especially true over the next few years when there is a good chance the market will decline well before (and potentially without) an official recession.
alereyes profile picture
Strong Temper is an asset and you seem to have it. Excellent article. I’m a value investor who seeks for business whose stocks can yield at least a 15% CAGR based upon my evaluations on ROE, ROIC and eps growth. Most of the excellent business that I have found are offering a 7 to 8% CAGR at present value. Of course sitting on cash it’s not a good idea, but buying something that will lead to a smaller return, that the one from the stock market, with the inherent risk of a drop in price, it’s not a wise play. Not because the erode in capital in the short term, If one was smart enough to buy good business and did a good evaluation, but by the fact, that one paid a big price for a low yield, and patience could have rewarded those who have it.
Mili21 profile picture
".......stocks can yield at least a 15% CAGR .......'
Curious to know few names in current markets that you can think qualifies the statement.
Cory Cramer profile picture
@axereyes2 Thanks. It's going to get really difficult the next year or so since I don't think anyone knows what inflation is going to do, and that could really put pressure on folks holding a lot of cash. Perhaps the best thing I can promote right now is portfolio balance and understanding that a recession is not right around the corner.
alereyes profile picture
@v38134 Me too!. I only know BABA at current price based upon my valuation, that could be wrong as any other valuation. But still waiting for it, to go lower to continue buying more.

FB too, but not at current price, it´s a two edge sword business with lots of changes due to no mature customers that change their minds in a split of a second and lots of competitors playing hard. But both greath businesses.

GOOGL has not rival in what they do, but for me, I would buy it only, if it goes below $1400 and, that is not going to happen, unless there is another market crash, that no one knows it will happen.

Energy Oil stocks are making a good run, but I´m in the oil business since 1996 and I can tell you that is not the come back as media want to make us believe. ( I wanted to buy TPL in nov at $450, but I could not valuate it, so, I passed. Also I have lots of friends in the oil business working in the US and being layed off) As 70% of oil is used for fuel, there will be no real growth for the next decade, only a short living momentum for 2021 and then, , maybe, going down again, I would not consider any investment in commodity type business, no matter how attractive they will be in 2021. My focus is in business that will last for decades and can increase their cash flow and profits in a organic way, which is very hard to know, but at least. I think, I can tell which have less chances to do so.

Since I´m not a fund manager, I have that little edge of not being in a hurry. I have money in other liquid and iliquid assets that yields 6% to 8%, As well in the stock market. Let´s say: 30% stocks, 40% Real state (yields 8% from rents), and 30% cash at 6% yield in Ecuador (in USD) and 3% yield in Mexico (in MXN) and in the USA with my broker with 0.000000000000001% yield, damn!!!
Excellent reminder to (Boy Scout motto) always ‘be prepared.’
Cory Cramer profile picture
@rgranlund Thanks for the comment. I've found it helps one to stay rational if they've thought about possibilities in advance.
Mili21 profile picture
Very balanced article.
MRK is trading in range but dividend growth is compensating for that.
I purchased UNH in 2009. My reason for buying UNH with full conviction was an insurance offered to all employees at my workplace, which is a fortune 500 company. If my company has a contract with UNH for 5 years or so and AARP is also through UNH, there is hardly a chance UNH to go burst.
Suspended DRIP about 4 years back as well as took out my investment money, leaving good chunk of shares still invested in it.
UNH is also one of the very few companies with CAGR > 15% for last ~20 years.
Unfortunately, the leading health insurance companies are trading too high in price (> $250) which could be pricey for some investors.
Cory Cramer profile picture
@v38134 Thanks for the comment. I wish I would have bought UNH in 2009, but I was too dumb.
Mili21 profile picture
@Cory Cramer
Looking at your writing / investing skills and time it required to acquire those skills, you were smart back then just that you didn't focus on UNH from investment perspective.
Cory Cramer profile picture
@v38134 I made one big 'investing' decision at that time and it was buying a house in the town and neighborhood that I wanted, which was big enough so that even with a growing family I would never have to move. My attention at the time was definitely focused there and I bought near the market bottom.

That said, I learned an important lesson about politics and investing from stocks like UNH, because of my opposition to Obamacare at the time, it clouded my investing judgment, and I missed some opportunities that should have been clear. The good part of that story is I learned my lesson. So I was able to see very clearly through the crazy politics of the past 5 years and able to focus on the investment opportunities that many investors got wrong (and in some cases, continue to get wrong) because I no longer let political ideology cloud my investing judgment.
@Cory Cramer Always a well thought out, well reasoned read on the market and a good presentation of solid investment ideas. Thank you for your continued articles. With this Rotation in the market, this only leads more thought on a "cyclical" not cynical view of market sector rotation and choosing quality characteristics (factors).
Cory Cramer profile picture
@Hugh Arhue Thanks, Hugh. It's a very dynamic situation that I'm afraid most retail investors probably don't understand. My portfolio has become quite disconnected from the moves of the major indices (in a good way) but it's very hard to explain and teach what is happening to investors who don't already understand it. You've followed my work long enough that you have probably witnessed my many different attempts to do so with varying degrees of success :)
BM Cashflow Detective profile picture
If there's one thing I've learned in the last 20+ years, it's that it has actually been a stock-picker's market every single year. Sometimes with more and sometimes with fewer offers. So in 2021 and also in 2022 I will prepare for the fact that, unsurprisingly, it will become a stock picker's market again. In this respect, I am always well prepared, even well beyond the year 2023.

I like your stock suggestions and I already own some of them or have bought them in the last few months.

There's still a lot of talk about a bursting bubble. Wonderful. As long as everyone is talking about it, it won't happen. False fear. In other words. The wall of fear is still intact. And the stocks can climb up along it. The market is only anticipating and pricing in the further recovery of the Covid 19 crisis. That's all. No reasons to get excited, just to keep buying things prudently.


The companies' future results will underpin current expectations. It would only be appropriate to worry if there were no more bubble items. Or statements like "This time it's different again" would appear. Until then, I recommend continuing to hold stocks and enjoy the trip.
Cory Cramer profile picture
@BM Cashflow Detective Agreed. Value is getting harder to find in the US, but that is based on a pretty slow earnings recovery from the 2009 recession. With the amount of stimulus we have coming, earnings could grow much faster than expected in 2021 and 2022 and much faster compared to the previous cycle. I don't count on it with my estimates because I tend to be pretty conservative, but if the economy bounces back fast, then valuations won't look so crazy and the calls for an overall bubble this year won't turn out to be true.
blah blah blah followed by Mrk and Cigna.
Cory Cramer profile picture
@Illius I disagree. I'm pointing out investors can still find value in this market no matter what major indices are doing.
almoni profile picture
I searched for a long time for the gist of this article and here it is ====
It's only $29/month,\с\
Cory Cramer profile picture
@almoni I gave some examples of what one's overall portfolio (and mindset) should be prepared for, and I get two actionable ideas to go along with it. I also shared the results of past ideas relative to the major indices.
almoni profile picture
@Cory Cramer among traders \\ I get two actionable ideas \\
the idea is called a trading view and includes an entry point- stop loss- and Tprofit level vs time horizon . have you done this ?
Cory Cramer profile picture
@almoni This is a portfolio strategy article. Most portfolio strategy articles don't even mention individual ideas. So, my goal with those was to point readers in the direction of some possible values within the S&P 500 rather than just write a vague article about portfolio positioning. I didn't have time to do a full write-up on each of them, which is what I said in the article.
I think investors are making a mistake if their portfolios reflect some of the extreme views that people currently have about the market, and that positioning for the ranges of possibilities I discuss in the article is wise. The idea of sharing a couple of simple ideas with metrics that are far better than the average stock in the market is to show that there are some options that are superior than cash. I have 350+ free articles on this site for readers to read up on my basic methods. The vast majority of those articles are on indiviudal stocks.
Greenhorn Investor profile picture
Thank you for the article
I like your picks and am long both MRK and CI.
Cory Cramer profile picture
@Disciple5 Great minds think alike :)
Buyandhold 2012 profile picture
Cory, you like Cigna.


So does my mother.

But I never try to predict what the stock market will do next because it doesn't matter.

If it goes up, I get richer. That's nice. It's nice to feel the wealth effect. Let's you loosen your purse strings a little. Take your car to the car wash instead of washing it in your driveway.

If it goes down, I can buy more shares of my favorite stocks while they are on sale.

If it stays flat, I can still take my schnauzer to the bank to deposit dividend checks.

And speaking of dividends, my dividend income was up last year. It goes up every year. Which means that I will have to pay more taxes. I'm waiting for my CPA to give me the bad news.

I wouldn't mind paying taxes if I could decide where my taxes were spent. But it annoys me when I read how my taxes are wasted. $125 for an aspirin. $450 for a hammer.

They should give me the tax money and I could buy them quite a few aspirin for $125 and quite a few hammers for $450.

And don't even get me started on those windmills in Texas.

Windmills are a tourist attraction in Holland.

No one goes to Texas to see windmills.

People go to Texas to line dance.
Cory Cramer profile picture
@Buyandhold 2012 If your mother and I agree, we must be on to something! Interestingly, I don't focus on dividends much, but because I tend to buy stocks when they are cheap, I get them anyway.
@Buyandhold 2012 Nothing like that One-Star state.
Just don't go there at all.
Buyandhold 2012 profile picture

Texas is wonderful.

Wide open spaces.


Business friendly.

Line dancing.

And Austin is like Boston, so you can visit New England without ever leaving Texas.

I have some friends in Texas.

They always say:

I was born and raised in Texas
And when I die, I'll be Texas dead.
Investing 101: Investors can make money in up and down markets.
Cory Cramer profile picture
@Growth2025 Sometimes everything goes down for a while, but that wasn't the case post-2000 and I don't think it's going to be the case in 2021.
g23riel profile picture
Thanks for somehow still finding a few valuation gems within a sea of overpriced equities.
Cory Cramer profile picture
@g23riel It's getting harder, but fortunately we've made a lot of money the past few years. So, I'm not going to complain much after earning quadruple the long-term market average three years in a row. We might have to wait for earnings growth to catch up for a while after 2021.
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