Slow and Easy Wins the Race

I recently liquidated a batch of stocks that were invested in momentum plays, swing trades, and speculative stocks and moved to cash, T-bills, and money markets. After some stunning losses over the past 6 weeks, I needed some fresh air and a little time for a new perspective on the market.

I still think we're in for a volitile market with little upside potential over the short haul for the rest of the year. But being more bullish for the long term makes me look for more entry points back into the market for possible gains, than the prospects of being on the sidelines.

My experiance of over 30 year sin the market tells me that the core and majority of my portfolio should be invested so as to provide the greatest potential for gain with minimal risk. I think I have strayed a bit from that philosophy and payed dearly for it over the past year.

In light of that fact I have spent the past few weeks doing extensive research and homework to come up with a portfolio of diversified stocks that I think have the greatest potential to outperform the market over the next 12 months as well as appreciate in price over the long term 3 to 5 year out to 2009 - 2011.

Speculation is good and chasing momentum can reap rewards if done cautiosly with a small percentage of your portfolio, but if you're looking for wealth accumalation for a secure future with a minimized risk, you'll need to be investing in stocks with P/E's low relative to their peers, that have accelerating earnings growth, sales increases, a high ROE and profit margins that are above other stocks in that sector.

I've narrowed my search down to 1 stock for each sector that I think have the greatest potential over the next 12 months as well as long-term price appreciation for 3 - 5 years. You may disagree on some picks, and that's fine, some I culled from my picks could just as easily have been on the list. All the following should hold up well in a downturn in the market, weather it's current volitility, and outperform long term.

For the complete list and the sector it's based on look at the followup post I'll put up next.

Materials : Alcoa AA

Energy : Chevron Texaco CVX

Industrials : General Electric GE

Consumer
Discretionary : McDonald's MCD

Consumer
Staples : Altria MO

Healthcare : Johnson & Johnson JNJ

Financials : Metlife MET

Infomation
Technology : Microsoft MSFT

Telecomm : Verizon VZ

Utilities : Duke Energy DUK

There they are, might seem old and stodgy to a degree, but each represents the best of class in it's sector and will make you money over the long term. There are quite a few that have a healthy dividend yield that helps offset any short term drop in share price.

I'll be putting 20 of my total assets into these picks tomorrow morning, buying equal dollar amounts of each stock. Then I'll add another 10 of the cash portion of my portfolio into additional purchases each month over the next 8 months, dollar cost averaging back into the market.

I think for the long haul America is strong and US equities are the best asset class for your funds.

Good luck to all of you with your choices as well.

Solid picks, truly best of breed.
For the long (looooooooong) term, you can't go wrong with these.
I used to work for Alcoa, sold AA at 33 last month as well. Solid company/earnings/growth (globally), and I think it's at an excellent entry price now at 29.

Great list. You don't like Citigroup? How about International Blue Chips?