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Some leading investment newsletter authors share stellar records but don't agree on where the market is headed. Bulls and bears offer their best bets for the new year.
What's in store for stocks in 2011? Each year around this time, I ask that question of the people whose advice a lot of savvy investors find worth paying for: stock newsletter writers who distinguish themselves by their records.
How to pick and use investment newsletters
But there are also several bears, who foresee some combination of high inflation, a weak dollar and modest stock performance, as the economy gets dragged down by a sluggish housing market and concerns about excessive government spending and stimulus. Out of the 10 stock newsletter writers below, six are bullish, three are bearish, and one predicts minimal gains in stocks in 2011 at best.
If you're a bull like me, however, the negative sentiment is encouraging. Any good stock market rally needs the proverbial "wall of worry" to climb. Put another way, if everyone started out bullish, who'd be left to buy our stocks and drive them higher? Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 300, 213, {"configCsid": "MSNmoney", "configName": "player-money-articles-NIC-16x9", "player.vcq": "videoByUuids.aspx?uuids=52a3c7c7-d162-4fc9-a2ce-68b732bef54f,91c942a2-0407-44f4-8b25-a673b7cddfe5,eae75af2-cf0b-4e20-bf11-55fa3e280fb4,f94feed6-6e63-4d9a-a0dc-19fe9689e4ea,babb4f53-2573-4f99-9b00-a4fc8ec8fec1,15f54f3c-e813-4f06-b5f9-1287a1d183ad,766817bc-3e7e-43f1-b89b-e854c2849719,8c1a17f6-55ac-4a7c-8755-84c4fe3e3487,4186fe81-a62e-4b2a-96b7-1452c34e909a,fde3fe98-2bdd-44ea-bdbb-73834d68e46e", "player.fr": "iv2_en-us_money_article_16x9NIC-top-pros-top-stocks-for-2011"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=52a3c7c7-d162-4fc9-a2ce-68b732bef54f,91c942a2-0407-44f4-8b25-a673b7cddfe5,eae75af2-cf0b-4e20-bf11-55fa3e280fb4,f94feed6-6e63-4d9a-a0dc-19fe9689e4ea,babb4f53-2573-4f99-9b00-a4fc8ec8fec1,15f54f3c-e813-4f06-b5f9-1287a1d183ad,766817bc-3e7e-43f1-b89b-e854c2849719,8c1a17f6-55ac-4a7c-8755-84c4fe3e3487,4186fe81-a62e-4b2a-96b7-1452c34e909a,fde3fe98-2bdd-44ea-bdbb-73834d68e46e;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');I've always relied on newsletter writers with solid long-term records, as ranked by Hulbert Financial Digest -- the industry's standard. This year, I'm including my own stock newsletter -- as a new arrival with a decent record so far, and because I should go on record, too.
Now here's the roundup of how these authors see the year ahead -- and their two favorite stocks for 2011. Brush Up on Stocks The strategy: For Brush Up on Stocks, I look for reasonably valued stocks that have good growth prospects, decent financial strength, and insider buying -- especially among the smaller companies that now tend to be under-followed by Wall Street and money managers who rely so heavily on quantitative models. This approach has produced solid results in stock and options suggestions.
The big picture: Investors need to take advantage of ongoing volatility, which will bring buying opportunities in the form of 5% to 10% corrections. But reasonably good 3% economic growth for the year and expectations of even better growth in 2012 should send stocks 10% higher for the full year.
Two favorite picks: A small cap favorite of mine is ValueVision (VVTV, news, msgs), which operates ShopNBC, a home shopping network. The stock has done very well in the past few months, but I believe it is still at least a double from here, because it's a turnaround in progress. I also like Johnson & Johnson (JNJ, news, msgs), a Warren Buffett favorite that pays a 3.5% dividend yield. The stock is like a health care mutual fund without the fee, because it is broadly diversified across pharmaceuticals, medical devices and consumer products.The Buyback Letter The strategy: The Buyback Letter favors companies that are repurchasing their own stock in large amounts -- a sign management sees value in the stock and expects better times ahead. It has produced 8.6% annualized gains since 1998 and solid relative performance in both up and down markets, placing it high on the Hulbert Financial Digest "honor roll" of stock letters, which do well in sluggish years for stocks as well as during good times.
The big picture: Editor David Fried believes the economy will continue to grow and drive stock prices up -- possibly enough to reach all-time highs.
Two favorite picks: Fried likes the retailer Gap (GPS, news, msgs) and IAC/InterActiveCorp (IACI, news, msgs), a media company. Despite getting crowded by competitors like Forever 21 and H&M, Gap still has great profit margins, strong cash flow and a solid $1.7 billion cash position. Management's plan to use $750 million to buy back stock signals it thinks it can step up its game against competitors, and continue to expand internationally -- two factors that could turn this company around. AC/InterActiveCorp is a collection of Internet properties, like Match.com, Ask.com and Citysearch. A rebound in the economy and jobs will help these sites get more ad revenue. Investors are also getting help from an ongoing aggressive share buyback program. Cabot China & Emerging Markets Report The strategy: Editor Paul Goodwin hunts for aggressive growth stocks that trade for more than $10 a share, because that means institutional money managers can buy them and drive them higher. Cabot China & Emerging Markets Report ranks third for five-year performance on Hulbert's list, with 21.6% annualized gains during that time.
The big picture: Goodwin believes overall global economic growth will be strong in 2011, with China's economy expanding by 9%. But U.S. growth will remain sluggish until employment picks up, which may not happen next year. He thinks stocks are due for a correction of at least 5% to 10%, following the recent robust rally and the sharp increase in investor bullishness, which often precedes a pullback.
Two favorite picks: Goodwin likes two recent Chinese initial public offerings that trade as American Depositary Receipts (ADRs), a type of listing in the U.S. for foreign companies. One is E-Commerce China Dangdang (DANG, news, msgs), a Chinese online retailer. He suggests waiting for a pullback to the low-$20 range to buy. The other is Youku (YOKU, news, msgs), a YouTube imitator that's in good graces with the Chinese government -- important, for business at least, in a country that keeps such a close eye on Internet content. He suggests waiting for a pullback closer to the mid-$20 range on this one.
Continued: Investment Quality TrendsMore from MSN Money
10 solid stocks for a volatile '1110 hot stocks for a cold winterWhere to invest in 2011: US large caps10 best stocks of 201010 worst stocks of 20101 | 2 | next >
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Enter a term:Go to the New Investor Center Article IndexMsn.Flash.Build('http://blubedbuia01:83/i/BB/CA237289BFB4368EB4C4EA8225B66.swf', '9', 110, 159, 'button',{allowScriptAccess:'always'});Recent Articles by Michael Brush10 hot stocks for a cold winter 12/14/2010Why food bills are heading higher 11/16/2010'Mad men' suiting up for a rally 11/02/2010More . . .Msn.Video.createWidget('Gallery8Container', 'Gallery', 500, 230, {"configCsid": "MSNmoney", "configName": "gallery-money-article-site-wide", "gallery.categoryNames": "New%20Investor%20Center;Top%20Picks;Market%20News;Most%20Watched%20Today", "gallery.categoryRequests": "videoByTag.aspx%3Ftag%3Dmoney-campaign_new-investor%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3DBest%2520of%2520Money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3DMoney_Dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Fmk%3Dus%26sf%3DDailyCount%26st%3D1%26ns%3DVC_Supplier%26tag%3DMSNmoney%26vs%3D0", "gallery.categoryTabs": "New%20Investor%20Center;Top%20Picks;Market%20News;Most%20Watched%20Today", "gallery.defaultTab": "New%20Investor%20Center", "gallery.fg": "gallery_site_wide_articles-NIC", "gallery.from": "en-us_msnmoney-site-wide-gallery-NIC", "gallery.linkback": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx", "gallery.linkoverride": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx?cp-documentid=", "gallery.permalink": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx?cp-documentid="}, 'Gallery8');Fund data provided by Morningstar, Inc. © 2009. All rights reserved.StockScouter data provided by Gradient Analytics, Inc.Quotes supplied by Interactive Data.MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances. 2CommentsNewestOldestBestWorstControversiallittleguy224 hours agoI wouldn't buy any of Michael Brushes Picks. Look up Graet Southern Limited- This was the pick that was going to make one a lot of money. It's shares are worthless. It is interesting how a journalist with no financial background or credentials can suddenly become a Financial advisor??? 0 0ReportSpamAcute ObserverWed 10:40 AMThe link to page 2 is broken.
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Now here's the roundup of how these authors see the year ahead -- and their two favorite stocks for 2011. Brush Up on Stocks The strategy: For Brush Up on Stocks, I look for reasonably valued stocks that have good growth prospects, decent financial strength, and insider buying -- especially among the smaller companies that now tend to be under-followed by Wall Street and money managers who rely so heavily on quantitative models. This approach has produced solid results in stock and options suggestions.
The big picture: Investors need to take advantage of ongoing volatility, which will bring buying opportunities in the form of 5% to 10% corrections. But reasonably good 3% economic growth for the year and expectations of even better growth in 2012 should send stocks 10% higher for the full year.
Two favorite picks: A small cap favorite of mine is ValueVision (VVTV, news, msgs), which operates ShopNBC, a home shopping network. The stock has done very well in the past few months, but I believe it is still at least a double from here, because it's a turnaround in progress. I also like Johnson & Johnson (JNJ, news, msgs), a Warren Buffett favorite that pays a 3.5% dividend yield. The stock is like a health care mutual fund without the fee, because it is broadly diversified across pharmaceuticals, medical devices and consumer products.The Buyback Letter The strategy: The Buyback Letter favors companies that are repurchasing their own stock in large amounts -- a sign management sees value in the stock and expects better times ahead. It has produced 8.6% annualized gains since 1998 and solid relative performance in both up and down markets, placing it high on the Hulbert Financial Digest "honor roll" of stock letters, which do well in sluggish years for stocks as well as during good times.
The big picture: Editor David Fried believes the economy will continue to grow and drive stock prices up -- possibly enough to reach all-time highs.
Two favorite picks: Fried likes the retailer Gap (GPS, news, msgs) and IAC/InterActiveCorp (IACI, news, msgs), a media company. Despite getting crowded by competitors like Forever 21 and H&M, Gap still has great profit margins, strong cash flow and a solid $1.7 billion cash position. Management's plan to use $750 million to buy back stock signals it thinks it can step up its game against competitors, and continue to expand internationally -- two factors that could turn this company around. AC/InterActiveCorp is a collection of Internet properties, like Match.com, Ask.com and Citysearch. A rebound in the economy and jobs will help these sites get more ad revenue. Investors are also getting help from an ongoing aggressive share buyback program. Cabot China & Emerging Markets Report The strategy: Editor Paul Goodwin hunts for aggressive growth stocks that trade for more than $10 a share, because that means institutional money managers can buy them and drive them higher. Cabot China & Emerging Markets Report ranks third for five-year performance on Hulbert's list, with 21.6% annualized gains during that time.
The big picture: Goodwin believes overall global economic growth will be strong in 2011, with China's economy expanding by 9%. But U.S. growth will remain sluggish until employment picks up, which may not happen next year. He thinks stocks are due for a correction of at least 5% to 10%, following the recent robust rally and the sharp increase in investor bullishness, which often precedes a pullback.
Two favorite picks: Goodwin likes two recent Chinese initial public offerings that trade as American Depositary Receipts (ADRs), a type of listing in the U.S. for foreign companies. One is E-Commerce China Dangdang (DANG, news, msgs), a Chinese online retailer. He suggests waiting for a pullback to the low-$20 range to buy. The other is Youku (YOKU, news, msgs), a YouTube imitator that's in good graces with the Chinese government -- important, for business at least, in a country that keeps such a close eye on Internet content. He suggests waiting for a pullback closer to the mid-$20 range on this one.
Continued: Investment Quality TrendsMore from MSN Money
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