What Should I Invest In for 2012? Part-2

Predicting the marketsAs mentioned in Part-1 of this series, I set out to write a wrap-up of investing strategies for 2012. While I was writing the post, the thought occurred to me why not ask the other well known bloggers and financial writers what they think? I was delighted with the response I received, and it’s now turned into this much larger two-part post.

Here is a recap what I sent them, hoping for a small paragraph:

“Short of hauling out the crystal ball, because your guess is as good as mine, I also wanted to know what sectors are in your radar, or even what stocks are on your favourite list – if you’re so inclined to share with my readers.”

“What do you think is the most important lesson investors need to remember going into 2012? Where do you think the best investment opportunities for investors will be? “

Here is what these financial bloggers and writers think are the best investment strategies and opportunities for 2012 (Part -2):

Derek Foster – The Idiot Millionaire

“In the early 90s, many financial “experts” were worried that Canada was destined for financial Armageddon.  Government debts and deficits were soaring, unemployment was persistently high and things looked bleak.  Today, the gloom has moved south of the 49th parallel.  US housing has collapsed, unemployment is high and there is a feeling that the “American Empire” is in terminal decline.  I have no clue about future geopolitical trends, but I like to invest when there’s “blood on the streets” and this seems to describe the thinking toward to US. “

“Right now you can buy the great multinational stocks from the US at reasonable prices and use the strong Loonie to buy more.    I mean these companies have 1-2 billion consumers in mature markets, and another 5 billion and growing, consumers in emerging markets.  The reality is that these companies ceased being “US companies” years ago and are now really global companies with large US operations. “

“For example, look at Coca Cola (arguably the world’s most recognizable brand).   Today the average North American drinks something like 300 flavoured drinks a year versus 20-30 in China and India…How many more drinks (and how much more money) do you think Coca Cola will be doing in 10-20 years?  Ditto for JNJ, ABT, PEP, UPS, PG, and the list goes on.  Buy these dividend aristocrats and the other with the strong Loonie, and sit back and watch the ever increasing cash roll in.  In a decade or two, you will be well-rewarded as the world economy continues to bring billions of people into the middle class.”

www.stopworking.ca


Susan Brunner

“I wonder how much we can expect from the stock market in 2012 because of the government debt loads in the western world.  It is not just the EU.  The US has to solve this problem as well.  And, we should not forget Canadian Government and Canadian Provinces, some of which also have rather high debt loads. Fortunately, the US and Canada have a few years in which to solve their debt problems. In the meantime, I think we are going to have continued volatility and slow growth in 2012.  There is a risk that the EU could cause another worldwide recession. “

“In Canada I think that we will continue to see improvements in our banks as long as the EU does not crash. Other financials are a mixed bag, but I expect that life insurances companies will not improve as interest rates will remain low for a while longer.  They are at a good price, but I view them as long term investments of 5 years minimum. I expect Consumer Discretionary stocks to also improve. “

“I expect that dividend yield will continue to outpace interest rates for a while yet.  Corporate Bonds will continue to be a better place to invest in than Government Bonds.  There are lots of corporations with strong balance sheets.  However, I must admit I have always preferred Corporate Bonds to Government Bonds. “

www.spbrunner.blogspot.com


The Passive Income Earner

“I believe the financial sector will still see some growth, and they continue to pay a healthy dividend yield. I also believe the life insurance sector is worth watching, for stocks that bottom out near a P/E of 10.  I think we will also see an increase in the interest rate this year. Carney has to signal to all the borrowers that rates will go up some day :)

“Utilities are worth adding on the dips. The business model is just too solid to stay away. If you want higher yield, look for some REITs instead of taking a risk on a higher yield stock. Look what happened to Yellow Media!  Going into 2012, investors should remind themselves to not get carried away with the herd. Look for the value at a good price. It’s a marathon and not a sprint :)

www.thepassiveincomeearner.com


My Own Advisor

“I don’t think you really understand what investing means until you experience and weather a major market downturn.   I think all investors have the potential to learn much more about themselves and their investing behaviour in bad markets than in good ones.  Learning how you react, more importantly, how you stick with your financial plan when the sky is falling speaks volumes about your ability to manage your portfolio and consequently, allows you to come out on the other side of the market storm unscathed.   In some cases, you may come out even better!   Will bad things happen in 2012?  I don’t know, but if you they do, no doubt you can and should learn from this year’s experience.  I’m going to try and follow this advice as well.”

“I would say opportunities exist in the international equity market.  Emerging markets are closer to their 52-week lows than highs.  That signals a buy for me.  I like Vanguard VWO-N for one example.   If VWO drops lower or even stays under $40, I’ll be buying more.  Established foreign equities are also good buys to me in 2012.  Why?  They’ve been beaten up.  I like Vanguard VEA-N for this play.  The top holdings in this ETF are Japan, U.K. and France.  These countries will rebound, but investors will need to be patient.  “

“Regarding dividend-paying stocks, I like the telecommunications sector in the U.S.  Great companies, high demand for services and great yields for investors.  Take your pick between AT&T (T:US) and Verizon (VZ:US).  Either one is a great long-term buy and hold in my opinion until the dividends change or there are significant changes in the business model and structure.  Regarding dividend-paying stocks here at home, I like Rogers Communications (RCI.B) and Corus Entertainment (CJR.B).  The latter recently increased their dividend by 10%, CJR.B dividend payout ratio is about 50%, yield is over 4.5% and you “get in” at a $20 stock price.  Disclaimer:  I own shares in AT&T, Rogers and Corus.”

www.myownadvisor.ca


Conclusion

On a final note I would like to thank those authors and bloggers who contributed. I also want to add the most important point is to save and invest regularly, keep out of consumer debt, and have an investment plan. In the end it doesn’t matter whether you are an index investor or a dividend investor. Patience, persistence, and staying the course are the keys. Remember, buy or add to your holdings when prices are low, and keep your asset allocation in check!

Thanks for reading!  If you missed Part-1, be sure to check it out!

Readers: What’s your take? Do you agree? Do you think there are other opportunities for investors in 2012?

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19 Responses to “What Should I Invest In for 2012? Part-2”

  1. I always like hearing different perspectives and strategies. Thanks for doing such an educational post.
    We invest money and save with every paycheck. In time we hope to increase what we can put away but right now we are doing what we can.

    • The Dividend Ninja

      Jan 24. 2012

      Miss T Welcome to the Ninja! Sounds like you’re on the right track. Regualr investing is the key – just stay away from those high-priced and high-fee actively managed mutual funds :)

  2. My Own Advisor

    Jan 24. 2012

    Thanks very much for including me Ninja.

    It was insightful to read about other investors, and “what’s in their head” at this time and for 2012. I have considerable respect for all of these investors in your series.

    Our opinions, perspectives and approaches may differ a bit, but we all have drive, motivation and goals. The bottom line is, we’ve got a lot in common.

    Continued success to you and your investing journey in 2012!

    I’ll be watching :)

    Cheers,
    Mark

    • The Dividend Ninja

      Jan 24. 2012

      MOA Thanx for participating! Your blog is one of the best Canadian blogs IMO. I like talking with both you and Passive Income Earner because you both have a very level-headed, prudent, and cautious approach to investing. Good call on your purchase of SYY today!

      I know that you and I share the same ideal of combining a portfolio of both index investments and dividend paying stocks – we saw the benefit of that last August :)

      Cheers
      The Dividend Ninja

  3. CultOfMoney

    Jan 24. 2012

    Ninja, great job collecting such a wide variety of investment plans from across the internet! I’ll say that my investment plan doesn’t really follow the majority of those that you posted. My investment plan is a model based on the ivy portfolio along with some other changes that help with my specific goals. Basically it is a realative strength model with a timing aspect and a core-satellite aspect. Last year returned about 10%. Relative strength strategies haven’t been performing very well the last few year however, mean reversion has been the best recently. Hopefully 2012 changes that up a bit.

  4. The Dividend Ninja

    Jan 24. 2012

    CultofMoney Thanx for posting and congrats on ur new blog btw. I like to keep my portfolio pretty simple, dividend paying stocks, and index investments (both to a 45% bond allocation). I like the dividends for income, and the indexing, becuase well I have no idea whatz going to happen next :) See you around Yakezie..

    Cheers
    The Dividend Ninja

    • CultOfMoney

      Jan 27. 2012

      Ninja, no problem at all with simple. I actually think what I do is pretty simple. Momemtum is really just putting money where it has preformed well recently. And recently the bonds and etfs with high dividends have been doing very well. It just that all the academic research shows a lot of investable ideas out there, and some of them are very complementary. I try and focus where there may be an edge over an index. Thanks for the welcome too!

  5. Dividend Mantra

    Jan 25. 2012

    Ninja,

    Great stuff and you got a lot of really smart people up there contributing their ideas. Good job in collecting all of those ideas in one, neat spot.

    I especially echo what Derek is saying. The amount of growth still ahead even for huge, multinational companies is enormous. I’m placing my bets now!

    Best wishes for all in 2012!

    • The Dividend Ninja

      Jan 25. 2012

      Mantra Thanx for posting! btw you were one of those smart people invited – Mr. Buffett Jr. ;)

      • Dividend Mantra

        Jan 25. 2012

        Ninja,

        I’m sorry. I didn’t receive any emails or anything? Sometimes my email spams incoming email too much. I apologize if you sent something. Honored to be invited!

        Best wishes.

        • The Dividend Ninja

          Jan 25. 2012

          Mantra that’s too bad I would have enjoyed your contribution! Try “white listing” my domain in your email account, or just email me later :)
          Cheers

  6. Doctor Stock

    Jan 25. 2012

    Hey, nice to meet you. First time here. I enjoyed the article and am familiar with several of these individuals/sites.

    You’re right… investing regularly is a great step… one that is often the first step so many need to take.

    • The Dividend Ninja

      Jan 25. 2012

      Doctor Stock thanx for posting! btw I had a look around your site, very impressive! Drop me a message sometime ;)
      Cheers
      The Dividend Ninja

  7. My University Money

    Jan 26. 2012

    Great meeting of the minds here. I find myself agreeing most with Derek Foster and MOA which doesn’t really surprise me seeing as how I agree with just about everything I read from those two authors! I do expect the US government to rebound going forward even if it doesn’t quite reach the relative levels it did in 2007, it will see decent growth rates.

    • The Dividend Ninja

      Jan 27. 2012

      MUM Thanx for posting! I have no idea what’s going to happen with the U.S. or world economy, but I sure do like holding dividend stocks, and collecting regular dividends to wait and find out :)

  8. Great post Ninja! I really enjoyed reading everyone’s perspective. I love the last line “Remember, buy or add to your holdings when prices are low…” I wish more people followed this strategy. Will you be attending CPFC12?

    • The Dividend Ninja

      Feb 01. 2012

      Hi Kanwal thanks for posting! – long time no see :) Yes as you know people are always in a hurry to sell when prices are down, yet it is absolutely the right time to buy.

      Don’t think I can do CPFC12 this year ;)

      Cheers

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