Opinion

John Wasik

These hot sectors may stay warm in the second half of 2014

Jul 28, 2014 17:26 UTC

CHICAGO, July 28 (Reuters) – With a relatively robust first
half for the U.S. stock market in the rear-view mirror, can you
expect hot sectors to continue their climb for the rest of this
year?

The answer is “yes”, assuming the news is generally
positive, and barring any nasty geopolitical or economic
surprises. Although there are a few high-glamour stocks leading
the way, several sectors are relative dullards, yet still worth
holding.

One of the biggest winners in the first half were aluminum
stocks, up 55 percent through July 18, according to Standard &
Poor’s. While hardly on anybody’s list of sexy holdings,
aluminum is a basic metal widely used in vehicles, appliances
and aircraft.

You can find one of the industry’s leading aluminum
producers, Alcoa Inc, in the Vanguard Materials Fund ETF
. The Vanguard fund, charging 0.14 percent for annual
management expenses, also includes stakes in chemical, paper and
steel companies such as Monsanto Co, Dow Chemical Co
and DuPont & Co. As well as aluminum, other basic
materials stocks such as these will do well if the general
economy and manufacturing continue to ascend.

The Vanguard fund is up nearly 25 percent for the 12 months
through July 25 and serves as a bellwether for industrial
production, which shows the relative health of the economy. That
compares with a 20 percent gain for the broader S&P 500 index
for the same period.

Will you get burned by following the hot money in ETFs?

Jul 21, 2014 16:26 UTC

CHICAGO (Reuters) – All too often, I see investors heading in the wrong direction en masse. They buy stocks at the top of the market or bonds when interest rates are heading up.

Occasionally, though, active investors may be heading in the right direction. A case in point has been the flow of money into certain exchange-traded funds in the first half of this year.

Reflecting most hot money trends, billions of dollars moved because of headlines. The Energy Select SPDR exchange-traded fund, which I discussed three weeks ago, gathered more than $3 billion in assets in the first half, when crude oil prices climbed and demand for hydrocarbons remained high.

U.S. transportation stocks for the long haul

Jul 7, 2014 17:44 UTC

CHICAGO (Reuters) – As North Americans hit the highways, airports and rails for vacations this summer, it’s not hard to believe that some of the most robust stocks are in the transportation industry – particularly in an improving economy. Transportation stocks have proven to be long-haul winners and essential cogs in any growth portfolio.

Transportation company performance is generally a bellwether of an economy’s health. When consumer and industrial demand is rising, the greater the need to ship raw materials and finished products from various points of the globe.

On the retail side, a combination of higher demand and the conflict in Iraq ratcheted up U.S. gasoline prices to the highest level in six years this past Fourth of July weekend, according to the American Automobile Association. Despite the higher prices, some 35 million Americans hit the road during the holiday weekend for trips of 50 miles or more.

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