Industry Ranks Update – The Aleph Blog

Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

Posted on 10 December 2008 by David Merkel

Okay, here are my current industry ranks:

Remember, my model can be used in two ways: in the red zone, for short term momentum players.? (Look at all of those relatively stable predictable industries.)? Or, the green zone, for value/contrarian players.? (Look at all of those cyclicals and financials.)

Which do you think will do better?? Mean reversion or relative safety?? My portfolio is spread across both, so I don’t have a dog in that fight.? I do think that portfolios in this environment have to aim to be self-financing, avoiding the need for capital raises in an environment where capital is scarce.

Away from that, I am still not a believer in financials, aside from insurers, and I don’t see much good among housing or autos, regardless of who gets bailed out.

One thought on “Industry Ranks Update”

Mark says:

10 December 2008 at 3:30 pm

David, I totally agree on financials. I think Heebner is jumping the gun on that call. Neither fundamentals or technicals are convincing at this point. The only other question I have is about energy … perhaps we’re not at the bottom of energy’s declines yet, but there’s no doubt that oil and natural gas are horribly cheap right now. To put it in perspective, we all remember Goldman’s call about oil being at $200/barrel in ’09 (can’t remember if it was by ’09 or in ’09). Now, we won’t be shocked to see it hit $25.

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