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These are such tricky times in the stock market that now, more than ever, you need the sharpest minds to guide you. To find out how the best of the best think you should invest in 2008, I rounded up some of the world's top investment newsletter writers -- experts with long-term records that have handily beaten the markets.
Here's the quick takeaway on how they think you should invest:
- Given the potentially dim prospects for the U.S. economy and stocks, it's best to position yourself for international exposure. But relax -- you don't have to buy exotic companies on faraway stock exchanges. Good ol' McDonald's (MCD, news, msgs) and General Electric (GE, news, msgs) should do the trick because they make so much of their money in other countries.
- In times of uncertainty, investors like to stick with the perceived safety of large-cap companies over small fry. So it makes sense to hold large players demonstrating solid growth, such as Apple (AAPL, news, msgs) or just about any of the stocks our experts suggest for 2008.
- Though sectors like housing, financials and retail may continue to languish, global growth should stay strong enough to sustain solid demand for oil and natural gas. This suggests established energy players such as Baker Hughes (BHI, news, msgs) and Imperial Oil (IMO, news, msgs) are a good place to put your money. To add a little zip, if not risk, to your portfolio, consider a revved-up alternative-energy play like Ormat Technologies (ORA, news, msgs), which produces electricity from naturally hot water underground.
- And though growth stocks will probably continue to best value names, don't count out the picks of established value investors who have great long-term records. They know how to handle times like these. Two of our experts believe deeply discounted value stocks -- for example, Motorola (MOT, news, msgs), Walgreen (WAG, news, msgs) and Visteon (VC, news, msgs), an auto-parts maker -- could shine in 2008.
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Here's a closer look at how six top-ranked stock-investment newsletter gurus think you should invest in 2008:
Go foreign as the U.S. stumbles
The Investment Reporter, based in Toronto, has just the kind of record you want in a stock newsletter during times of uncertainty. Its history of shining in both up and down markets won it top rankings from Hulbert Financial Digest, which rates investment newsletters, for all-weather investment letters. The Investment Reporter has produced 14.4% annual gains over the past 20 years.Editor Marc Johnson believes the S&P 500 Index ($INX) will finish 2008 lower than where it begins because economic weakness in the U.S. will bring down corporate profits. So he favors established companies posting strong growth and with plenty of exposure abroad.
- Talk back: Do you expect a recession in 2008?
One of his top picks is McDonald's, which gets about two-thirds of its revenue overseas. A big plus for the world's largest restaurant chain is that the meals are cheap. "Consumers won't cut back as economies slow down," says Johnson.
McDonald's posted 8.2% global sales growth in November at outlets open more than a year, thanks to strong growth in Europe and Asia. It's also winning over more customers with new menu offerings such as Angus burgers, Southern-style chicken and specialty coffee.
Johnson also likes Imperial Oil, a play on Alberta oil sands -- thick, tarlike deposits from which energy companies extract petroleum. ExxonMobil (XOM, news, msgs) owns 69% of Imperial Oil and may buy up the rest of the company at a premium price in the future, Johnson says.
Global Investing takes the premier slot for five-year returns with the lowest volatility, according to Hulbert Financial Digest, which is written by Mark Hulbert. The newsletter's picks have produced 31.6% annualized gains over the past five years. What better place to go for insights on how to get international exposure?
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Buying the big banks in 2008Job Curtis, a value and income manager for Henderson Global Investors, says bank stocks may be good buys at some point in the year.
Global Investing Editor Vivian Lewis, who's also a past champ of MSN Money's Strategy Lab stock-picking game, cautions investors to avoid China plays, since that economy and many Chinese stocks simply look too hot right now. She's also wary of companies that compete with U.S. exporters because the cheap dollar makes exporters' goods less expensive elsewhere in the world.
Instead, Lewis favors Barclays (BCS, news, msgs), which has created a money machine by producing a large number of fee-generating exchange-traded funds. The bank is also expanding into emerging markets, and its stock carries a 6% dividend yield. Insiders are "buying like crazy," another bullish sign for Lewis.
Next, Lewis likes Teva Pharmaceutical Industries (TEVA, news, msgs), a generic-drug maker based in Israel. Lewis figures that as health care spending balloons as baby boomers grow older, governments in the U.S. and Europe will pass laws that will make it easier for Teva to bring generics to market, easing the costs of government health insurance plans for the elderly.
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