The 10 best stocks for 2009

First, these stocks offer what I'd like to see now and for the next six to nine months: safety, a modest dividend return of at least 2% to 4% and some upside leverage if the global economy delivers a positive growth surprise. And second, they offer what I'd like to see for later: exposure to the most timely of the 10 long-term macro-investing trends that I describe in my book. (You can find a list of these 10 trends in my Oct. 21 column, "10 trends for long-term gains.") By buying these stocks, I start creating the core of a long-term portfolio for the five years or more after this bear market.

The following are my 10 best picks for 2009. After the picks I'll have a few words about how much money -- and when -- you should put into these stocks. Please read that section before you invest.

The 5 best stocks for the first half of 2009

• Deere (DE, news, msgs), a farm machine producer that tracks the price of agricultural commodities. Yield: 3.1%. It was added to Jubak's Picks on Jan. 12, 2007.

• Enbridge (ENB, news, msgs), a natural-gas and oil pipeline company that has a 3.8% yield. It was added to Jubak's Picks on Dec. 18, 2007.

• ExxonMobil (XOM, news, msgs), the world's best integrated oil company for the current environment. With a yield of 2%, these shares just make my cut.

• Flowserve (FLS, news, msgs). Can you say infrastructure? It makes pumps and valves for moving everything from water to oil and has a yield of 2%.

• Rayonier (RYN, news, msgs), a producer of wood products and an owner of timberland. Yield: 7.2%. It was added to Jubak's Picks on Nov. 9, 2007.

The 5 best stocks for the second half of 2009

• Goldcorp (GG, news, msgs), the world's low-cost producer of gold. It was added to Jubak's Picks on May 30, 2006.

• Google (GOOG, news, msgs), the dominant Internet search company just gets more dominant.

• HSBC (HBC, news, msgs), the best banking franchise left standing in Asia.

• Petrobras (PBR, news, msgs). The Brazilian national oil company has dozens of new fields under development. It was added to Jubak's Picks on Aug. 26, 2008.

• Thompson Creek Metals (TC, news, msgs), the second-largest private producer of molybdenum in the world. It was added to Jubak's Picks on June 26, 2007.

Use some cash to ease your way into positions in the five stocks in my picks for the first half of 2009 on dips in the stock market. Look for a stretch of days when the Standard & Poor's 500 Index ($INX) is sitting near 840, which looks like a bottom for this stage of the bear at least.

Or you can also start to dollar-cost average into these stocks. That's an especially useful method if you are a beginning investor starting a portfolio.

Don't rush into investing all your cash. Remember this is still a high-risk bear market. And you want to have cash on hand to invest in my best stocks for the second half of 2009 when the time is right in the fall.

If you're a beginning investor or have moved all your cash to the sidelines, I'd suggest buying at a pace that puts about 25% of the cash that you ultimately want to devote to stocks into the market by mid-2009.

How to rebalance

If you're already invested, as I am in Jubak's Picks, I suggest rebalancing your existing portfolio using these dividend-paying stocks to replace other stocks in the sector that don't pay you to wait. If the stock allocation of your portfolio is already 50% or more in the market, I wouldn't recommend increasing that commitment to stocks now.

I've got Jubak's Picks at almost 50% in cash as of Dec. 16. That means I've got just 50% of my stock portfolio actually in stocks. (I run an all-stock portfolio on these pages. You, I assume, have some money in other instruments, such as bonds. I'm writing here only about the stock portion of your portfolio.) And I'm trying to keep my cash position at roughly that level even as I shift the portfolio to take advantage of the current opportunities in the market.

Think about gradually putting another 25% of your cash to work in the fall -- if it looks like the economic scenario that I outlined at the beginning of this column is working out as projected. Increase that buying if the recovery seems nearer than the end of 2009 -- or if we get a major "buy" signal from technical indicators. Hold off or slow down your buying if the economy sinks deeper and faster than economists currently project. Remember this second group of five stocks isn't designed to pay you to wait.

Don't try to hit a home run in 2009. You're likely to wind up whiffing. A solid single or two, maybe even a double, would be enough to turn 2009 into a better year for you than just about anybody expects right now.

Continued: Developments on a past column

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