After a year of rocky economic recovery and a mixed bag of U.S. data, market strategists are waxing optimistic about the profit prospects in 2011.
"There is still an awful lot of pain out there for sure, but if you get this creeping confidence to accelerate a little bit, it's surprising how fast things can turn," Sandy Lincoln, chief investment strategist at M&I Investment Management, told MarketWatch.
A year plagued by Europe's debt contagion, the May 6 market "flash crash" and constant fears of a double-dip recession caused many investors to keep money parked on the sidelines.
But the Standard & Poor's 500 Index gained 12% last year, the Dow Jones Industrial Average rose 10% and Nasdaq Composite Index climbed 17%. Those who stayed in the game – and made the right plays – netted considerable profits.
Now those eager investors who sat out 2010's bull market are determined to avoid making that same mistake in 2011. This surge of investing is what Money Morning's Chief Investment Strategist Keith Fitz-Gerald calls "professional performance anxiety."
"A lot of professionals were surprised by the ferocity of the run off of the March 2009 lows," Fitz-Gerald told Fox Business News' Varney & Co. program on Dec. 21. "And what that means is they, like a lot of small investors, have actually got money on the sidelines or they've just begun to put it to work and in 2011 they're going to be anxious to make up what could be a hole in their performance run rate over the last few years. That could add a nice tailwind in and of itself."
Those who avoided the market missed last year's gains and should consider giving stocks another chance.
For investors looking for 2011's hottest stock picks, Money Morning Contributing Editor Shah Gilani pointed to sectors expected to shine in his U.S. market forecast.
"The high-tech, energy, materials and commodities sectors will be hot in the New Year," said Gilani. "And the U.S. stock market will get an added boost from the fact that U.S. Treasuries, municipal bonds (munis) and euro-based investments will not."
This brings us to next week's Money Morning "Question of the Week:" What are your 2011 investing strategies? Are you changing your strategies in the New Year? What market sectors or investment vehicles do you think will do the best and worst?
Here is a collection of responses from readers, whose 2011 investment strategies focus on silver, debt repayment and avoiding the U.S. dollar.
Ring in the New Year With Silver
Silver over gold. I can afford $40 per ounce of silver easier than I can afford $1400 per ounce of gold. I'll be buying as much silver as I can afford.
Every time I go to buy something, I ask myself, "How many ounces of silver is this going to cost me?"
In other words: "What is the opportunity cost of this large pizza versus one ounce of silver."
All of my credit cards are paid off … and cut up and destroyed. I pay cash for everything in the short run – snacks, gas, food, etc. House and utilities are paid out of my wife's online account. I could afford a $600 month new car note, but do not want to.
Cars, motorcycles, boats, and guitars – they are not stores of value, nor can they be used for barter. They do not retain value, and resale price falls like a rock.
I'd rather have silver instead. Silver satisfies that quick fix that I need every week.
– Jesse S.
Bought some gold and continue to buy silver. Right now silver is selling very well since the market is devalued. The shop where I buy metals was actually sold out on silver a couple of weeks ago.
– Vince B.
– Paul N.
Goodbye to Debt, Hello Profits
Getting out of all credit card debt – looking to refinance while the rates are still low – possibly really playing the market next year.
With the printing of so many U.S. dollars, there has to be a period of very high inflation coming. My take is investing in Canadian dollars.
– Frank J.
Be prepared with doing more research. If you missed the chance in 2010, no regrets. There are always chances in the next year.
– Sharon Z.
[Editor's Note: Thanks to all who responded to last week's "Question of the Week" regarding investing strategies in the New Year.
Be sure to answer next week's question: How do you think the stock market will perform in 2011? Do you see it rising as much as 15%, or are you expecting a more-modest increase in the 3% range? Or are you bearish – and worried? Do you think the currently pervasive bullish hype is warranted? Or are investors getting overconfident, leaving themselves vulnerable for a nasty market pullback?
Send your answers to email@example.com.!
Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at firstname.lastname@example.org. Make sure to reference "question of the week suggestion" in the subject line. We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
U.S. stock watchers optimistic on 2011
- Money Morning:
Three New Year's Resolutions That Will Bolster Your Investment Portfolio in 2011
- Fox Business News Varney & Co.:
Video of Keith Fitz-Gerald's Appearance
- Money Morning:
U.S. Stock Market Forecast: Tech, Energy, Commodities and Gold Are Top Plays For 2011
- Money Morning News Archive:
Question of the Week Feature