How Investors Can Survive In a Stock Picker's Market
For instance, Buffalo Wild Wings has nearly doubled in the past two months.
Similarly, a desire to find less expensive modes of entertainment should be beneficial for mail-order video rental firm Netflix.
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And Sparks even extends the argument to car care, where a company like AutoZone will get more business from people hanging onto their cars longer.
"The end of the bear market may be characterized by more of a grinding phase than a panic button," he says. "If that's the case there are going to be certain sectors, pretty narrow, that would outperform."
Others Will Wait
Investors have been busy putting money to work since the rally begin, but the new rangebound market has tempered some of that enthusiasm.
Portfolio managers who were adding to positions in recent weeks are holding their positions until the aforementioned pullback hits its stride. Some say that will happen after the bank stress tests are disclosed, while others believe it could come with an unexpected jolt of dismal economic news.
"There's no fundamental good news, and the fact that we had a six-week rally, which we haven't had since the 1930s, and we moved up quite a bit suggests we need some retracing for this to be long-term stable," says Michael Kresh, president of M.D. Kresh Financial Services in Islandia, N.Y. "It's probably relating to money chasing the markets and trying not to be the last person to get involved in this rally, which is not sensible for a long-term investor."
In the interim, then, investors likely will look to be nimble until there are signs of a long-term stabilization with the economy.
"We still haven't corrected one of the basic imbalances driving the recession. Housing prices are likely to continue falling," Nomura's Pandl says. "There are some green shoots, but it's not quite spring yet."