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Alvida 2011 and Happy New Year 2012!

Bye-bye/Alvida 2011. It was a gut-wrenching year with so many Geo-political events all across the board and associated stock market moves. What started as a promising year with DOW reaching yearly high by late Apr turned out to be whimper by end of year with S&P barely moving at all. Someone who had gone into hibernation may not even notice the dramatic stock market movements (like 250 points moves on so many days). Personally my stock market returns were dismal (basically all 2010 gains were wiped out in 2011). Unfortunately my weekly/bi-weekly picks also did not do very well.

So with that dismal track-record, I ought to change my stock picking/investing strategy. Let's start with some macro predictions. 2012 being election year, first some election predictions:

  • Mitt Romney will wrap up Republication nomination by Mar 2012.
  • Democrats would lose control of senate by margin of about 2-4. Republicans would lose seats in house reducing their majority to single-digits/teens. Most of the losses would come from their tea-party candidates.
  • After lots of ups and downs in weekly polls leading to Nov elections, Obama would win Presidential election with slight margin.
  • With loss of house, President Obama would have to change his strategy to deal with republican congress.
  • In other major elections, Sarkozy and Putin would win elections to be Presidents of France and Russia respectively
With election predictions out of way, let's predict economic/stock market
  • US GDP growth would be around 2-3% for 2012
  • DOW would go above 13000 and S&P above 1350 sometime before summer 2012. 
  • By year-end 2012 with elections out of way, DOW would end above 13000 and S&P close to 1350 for returns of about 6-8% for 2012
  • 10-year treasury yield would be around 2.4% (currently it is around 1.87)
So here are 10 picks based on these macro-predictions with target buy prices in brackets. This portfolio should return about 10% in 2012 including dividend returns provided you invest equal amount in each security and hold till Dec 31, 2012.
  1. AA ($8.64)
  2. BAC ($5.5)
  3. FCX ($36)
  4. GE ($17.85)
  5. KND ($11.77)
  6. MET ($31)
  7. PCX ($8.16)
  8. RIG ($38.38)
  9. STX ($16.16)
  10. TMV ($66)
Please do your own due-diligence before investing since these are just my suggestions based on my risk profile.
Happy Holidays and Happy New Year!

/Shyam


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