Global stocks were up in thin trade on Tuesday as 2008 comes to an end with a hint of optimism that the government stimulus plans will work next year. Government bonds rose as investors appear to want some peace of mind over the New Year's holidays.
Experts tell CNBC where to invest in this bear-market rally for the short term.
Sector Picks for the Short-Term
Dodge Dorland, chief investment officer at Landor Investment Management, sees some short-term opportunities in the aviation, diversified consumer services and education services sectors.
One Bear-Market Rally Comin' Up
Watch out for a bear market rally as Dodge Dorland, CIO at Landor Investment Management, believes we are still in a bear market. But he tells CNBC that we are probably at the tail end of it.
The Perfect Pair Trade in Bonds
The perfect pair trade is: short the 30-year U.S. Treasurys and go long on corporate debt and junk, says Bill Smith, president, CEO & senior portfolio manager at SAM Advisors.
Get Ready to Short 30-Year US Treasurys
Bill Smith, president, CEO & senior portfolio manager at SAM Advisors is getting ready to short the 30-year U.S. Treasurys as he believes they are wildly inflated. He reveals more of his investment strategy.
Beware of Temptingly Cheap Stocks
Beware of statements saying equities are cheap, as stocks aren't cheap if earnings decline faster than price, warned Stephen Davies, CEO at Javelin Wealth Management, Tuesday. Davies also sees more writedowns in the financial sector and banks requiring more capital in 2009.
Stocks on the Dow are at 2002 prices, making them very tempting, Alpesh Patel, principal at Praefinium Group noted. But indices could fall another 15% possibly by the end of January "as we realize there's not a lot to be particularly optimistic about," Patel added.
"We haven't seen the lows in the markets," Patel told CNBC.
"We might see a little more of a follow-through rally into the early part of next year as further details of the bailout packages come through," Davies said. "We may well see during the first quarter of 2009 is this transfer of debt from the consumer to the government."
The focus for the first half of 2009 will be on credit markets because it's the credit markets were the problems began and it's the credit markets where the problems will end, according to Davies. He also sees the U.S. leading the global markets out of the credit crunch.
Look for Industrials, IT and Basic Materials
"It's very rare that the leaders in the last bull market are going to be the leaders in the next bull market," Robert Pavlik, CIO at Oaktree Asset Management, said. He sees oil's recovery taking place in the second half of '09.
Pavlik thinks early cyclical stocks like industrials, IT and basic materials will be in focus next year. US economy will be the first to recover, according to Pavlik.
Deleveraging Cycle Will Last into '09
The deleveraging cycle is going to continue into 2009 and it will be a damper on growth, says Hans Goetti, CIO of LGT Bank in Liechtenstein.
Stimulus Measures May Bear Fruit in H2 of 2009
As Stuart Bennett, senior European economist at Calyon believes the global stimulus measures will bear fruit in the second-half of 2009, he suggests going long on the U.S. then.
The US Government Has Gone "Wild"
The U.S. government has gone wild, says Bill Smith, president, CEO & senior portfolio manager at SAM Advisors, as it is not supposed to be a huge leveraged hedge fund. He tells CNBC that the sooner they get out of the capital market, the better.