Which Sector Are You in ??

There are alot of stocks to invest in ?
How do you decide which one to pick ?

The best way to start is to decide which sectors to invest in. Decide for youself which sector you think you like and is going to do well in the near future. Once you pick the sectors you like, look into sub-sectors. Now inside this sub-sector look for companies with good EPS, P/E, PEG and market capital.

Everyone should make a like it - dislike it list, and STICK to it.

I will go through few of my personal ones and also would add some reasoning as to why.

Like it...

* I like Gold/Silver stocks.
Love it, hate it but can't ignore it. I am talking about Gold. When the dollar becomes stronger, gold will see a downslide. Gold prices tend to fall when energy prices drop, as the yellow metal is generally seen as a hedge against oil-led inflation. With the dollar becoming week, the gold and silver prices will go up. Gold/Silver stocks are definitely top priority.

* I like Tech stocks (companies with unique products, brand, outsourced cost cutting operation)
Tech stocks with unique, amazing products always do good. Lets take Apple as an example. With the advent of iPod they changed the way people listen to music. Same goes for Vista from Microsoft. Cool products always sell and companies make money. Also tech companies that outsource their work to cheaper places always end up saving more money. This basically means there is more cash in hand for them to involve in more products.

* I like Semiconductor stocks (manufacturing chips for prefered consumer products)
Chips are getting smaller and smaller and more features are added to it. Designing such chips is not for everybody. Again designing special types of chips is again a niche market. For example Micron Technology makes memory chips. Now this is a niche market. Memory is always in demand, and year after year the demand for memory grows.

* I like Health Care stocks (with strong sales)
Everyone loves to be healthy, but not everyone is lucky. Health products are more in demand than ever. I see strong growth in this sector.

* I like Real Estate stocks (but i am bearish about them this qtr)
If you are living the american dream you sure want to buy a house sooner or later. Housing industry can go through a slump for a while but it will always rebound back.

* I like High Dividend stocks (the divendend can compensate against any downward movement)
Safe bets. Even if the stock price goes down, the high dividend can cover up for it.

* I like Emerging Market stocks (way too much growth and its rightly justified)
Emerging markets like China, India, Brazil is growing by leaps and bounds. There is no stopping them. Their GDP is in double digits and the growth rate is phenomenal. If wisely investment, could be your best bet ever.

* I like stocks with rock solid EPS and strong strong PEG
EPS and PEG is nothing but, earning per share and earnings to growth ratio respectively. More the earnings, better the company is. Additionally if the future growth is expected to be higher, better the stock price will perform.

Dislike it...

* I dislike Copper stocks. (less demand, too much supply)
Copper has not been always the favorite among investors. Another problem is the demand-supply ratio.

* I dislike Airline/Transportation stocks (less margin, high operating cost, too much competition)
Everyone wants a cheap ticket. No one is will to pay more. Travellers like to cut their cost by looking for cheap air tickets.No one cares for what the fuel prices are. Airline sector is a tough place to be with less margin, high maintenance cost and too much cut throat competition. Stay out. Only worthy airline to look into is SouthWest Airlines (LUV)

* I dislike Auto industry (too many job cuts, competition from overseas)
Too much competition from emerging markets.

* I dislike Tech stocks (bad management, just another product)
Bad PR, silly management folks, just another product can be a nightmare for the stock price.

* I dislike Wireless/Communication service provider stocks (again too much competition)
People want to get more minutes and pay less. Where does that leave these wireless companies ? Profits can take a serious blow. Again too much competition. Only bright stock is AT&T (T) after their deal with Apple.

* I dislike Biotech stocks (especially when their drug might be rejected by FDA)
Too risky. Biotech stocks rely on FDA approval for their drug release to the market. If they meet with some glitches with the FDA, the stock will be trashed. Keep away. (Example NUVO - Check out how badly it was beaten)

* I dislike stocks with negative EPS and below par PEG (too volatile to trust)
Dont need to say much here. This is common sense. Low PEG means less future growth. Who wants to invest in such companies ?

Once the sector selection is done, it makes life much easier to decide which stocks you want to focus on. My reasoning for liking and disliking sectors are solely my opinion, and i would encourage everyone to do their own homework.