The Week Ahead: Time To Search For Bargains?
Jeff Miller | Apr 08, 2013 12:08AM ET
As the market averages reach new highs, there is a sharp divergence in advice. While we digest last week's economic news and wait for earnings reports, I expect a new theme this week.
How should you react to new market highs and first-quarter trends in various sectors? Should you reduce exposure, expecting a sharp correction? Or should you shop for bargains among sectors and stocks that have lagged in performance?
As he does so often, excellent F.A.S.T. Graphs method .
The result? The sector has a yield of 2.11% and a P/E of 16. Neither is very exciting. The individual stocks are all pretty fairly valued. Most importantly, the risk is greater than you might think. The beta versus the S&P 500 is 1.07, but something much worse could happen if and when interest rates rise.
The answer to the questions I posed in the introduction varies with your investment objective and time frame. I expect a rotation to stocks and sectors that have so far lagged in this year's rally. Traders can play the trend. For investors, it is a good time to look for bargains.
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