I don’t know about you, but I’m tired of the posturing on Capitol Hill. It seems like one minute a promising deal is on the table and fiscal compromise seems possible and the next moment our nation’s leaders are bickering again. So it’s no mystery why the major indices only rose slightly this morning—even after the Commerce Department announced surprisingly strong economic growth for the third quarter.
The fact is that investors are distracted and frustrated. In fact, when I polled my followers on Facebook a few weeks ago about their thoughts on the economy, the overwhelming majority agreed that thanks to the Fiscal Cliff they’re not sure what to think.
That got me thinking. After all, with our financial futures at stake, each and every one of us needs a “Plan B,” no matter what happens in Washington.
I’ve already covered what we can expect when the clock strikes midnight on January 1, so if you haven’t had a chance to read my “Fiscal Cliff 101” post, I recommend that you take a moment to do so. Then be sure to return to this page because you won’t want to miss what I have to say next.
The key to prosperity in 2013, no matter what the markets throw at us, is surprisingly simple: Screen, screen and screen some more.
I’m talking about my using my Portfolio Grader screening tool the fullest. If you’re not yet familiar with Portfolio Grader, it’s a powerful tool that not only identifies market-beating stocks to help you boost your portfolio, it also helps you side-step troubled companies that could take your portfolio by surprise.
When it comes to finding market-beating stocks on Wall Street, there are two critical characteristics you need to keep in mind. The first is strong fundamentals. By fundamentals, I mean sales growth, earnings growth and the like. Growing companies are companies that are healthy and thriving. They have smart leaders who know how to run and manage a smart business. If a company is struggling to sell its products or is spending more than it makes, it’s not a company that you want to own for growth.
The second characteristic I look for in any great stock is strong buying pressure. Think of this as "following the money." The more money that floods into a stock, the more momentum a stock has to rise. And there’s no doubt about it, we all like stocks that rise!
Believe me: It pays to stick with the stocks that receive an A- or B-rating from Portfolio Grader. Over the past 10 years we’ve seen a huge advantage to investing in highly-rated stocks.
And I expect this gap to widen even further in 2013. If we don’t see a deal worked out by 2013, we’ll have some choppy trading action to look forward to. Come next earnings season, the companies that don’t cut the mustard in terms of fundamentals will sink like rocks. Many investors will panic and seek the security offered by only the strongest companies. By using Portfolio Grader now to separate the wheat from the chaff, you’ll be prepared for the massive flight to quality that’s to come.
Below I’ve listed a sample of “winners” and “losers” from several industries that will be sure to be in the spotlight next year. You’re welcome to use this as a reference for your own “Plan B” to prepare for what’s to come.
Best Internet Retail Stocks
Worst Internet Retail Stocks
Best Semiconductor Stocks
Worst Semiconductor Stocks
Best Pipeline Stocks
Worst Pipeline Stocks
Best Pharmaceuticals Stocks
Worst Pharmaceuticals Stocks
Best of luck to you in the New Year. Despite the challenges ahead I’m convinced that with a little planning and a strict set of standards, we can all profit in 2013.