forum, let's identify

Earlier I posted an article called "Keep this on your fridge"
I find it interesting and thought maybe everybody who wants can list the stocks under each sector they think we should not buy/short, and those we should buy

for memory I will post part of the article again and then post a list of my stock thought at the end

----------------------------------------------

The sharemarket is suddenly falling, not rising. The Reserve Bank has hinted the economy may be slowing, not growing. These are big changes. Falling market. Slowing growth. It means:

· Lock in profits in things that have gone up a lot.
· Sell small trading stocks.
· Sell volatile sectors.
· Sell cyclical sectors.
· Rotate into defensive sectors.
· Rotate into low-risk income stocks.
· Stop giving concept stock the benefit of the doubt.

Sectors to sell include stocks that have risen a lot, are exposed to the economic cycle, have high price-earnings multiples and low yields, priced on hope and glory instead of a boring story:

· Discretionary stocks: Retailers mostly, selling items you don't need.
· Media: Advertising is the first expense to be cut.
· Leisure: People cut back on travel/hotels.
· Builders: House prices drop and builders suffer.
· Transport: At the pointy end of the economic cycle, people ship less goods around.
· Stockmarket-exposed stocks: Obvious - stockmarket falls, stockmarket stocks fall.
· IT: Another expense to be cut in tough times.
· Resources: Exposed to metal prices that are driven by global economic growth.
· Chemicals: Dictated by commodity prices.
· Paper: Paper and pulp prices dictate.
· Biotechs: Priced on irrational exuberance.

Investing is not about analysing the trees; it's about predicting where the wood is off to, and in Australia, the wood is on the move."

On the flip side are defensive stocks, with predictable earnings, steady dividends, monopolies, captive client bases, low P/Es and high yields:

· Food: Everyone's got to eat.
· Booze: Drinking habits are not that cyclical.
· Health care: Everyone still needs it.
· Property trusts: Rents are fixed on long-term contracts, high yields.
· Gambling: Gamblers gamble regardless.
· Utilities: Tend to be priced on valuation and yield. Monopoly customer bases.
· Energy: Like utilities, fairly certain cash flows thanks to monopoly nature of customer bases.
· Banks: Priced on yield, P/E discount to market.
· Telecoms: Theoretically cyclical, though Telstra is pretty defensive at the moment.
· Rural stocks: Priced on drought.
· Oil stocks: Priced on the oil price.


---------------------------------------------------
To short, keep out of

Discretionary stocks: BBG (the clothes too exensive)
Media: NWS (this stocks sucks all the time anyhow)
Leisure: VBA
Builders: BLD
Transport: TOL
Stockmarket exposed: AMP (last result was as good as it will get for awhile)
IT: hmmm......don't know
Resources: ILU (last result shocking anyhow)
Chemicals: ORI? not sure about this sector either
Paper: AMC (being probed, no ceo, downgraded, yuck)
Biotechs: VCR (ehhhh)

To buy

Food: WOW (CML has Myers, no good)
Booze: FGL (need to drink to keep the pain away)
Health Care: RHC (and then need to see doctor)
Property trusts: never traded this sector either :)
Gambling: ALL (always people in the casino, live on hope)
Utilities: not sure
Energy: STO
Banks: WBC (most domestic bank)
Telecoms: The article already said TLS
Rural Stocks: AWB?
Oil stocks: WPL