AlphaProfit Outlines Strategy for Cash-Laden Investors to Re-Enter Equities

Nov. 17, 2009 - PRLog -- Year 2009 has been a challenging one for investors. In the first quarter, many investors exited equities into money markets for safety. They are gnashing their teeth at the miserly returns their money market accounts are yielding them while the stock market soars to new yearly highs. With the S&P 500 now up 67% from its 2009 bottom, cash-laden investors are thinking if it right to get back into equities.

There are reasons to fret over. There is concern that the Federal Reserve’s near-zero interest rates may trigger inflation. Gold recently broke through the $1,100 per ounce mark. Corporations continue to lay off workers. The unemployment rate stands at 10.2%, the highest since 1983. As such, investors are concerned over the possibility of the stock market reversing course and falling below the March 2009 lows.

Sam Subramanian, Managing Principal, AlphaProfit Investments believes the odds of equity prices breaking through the March 2009 lows are fairly slim for the following reasons:

• The U. S. economy is showing signs of improvement. The gross domestic product expanded at a 3.5% annualized rate in the third quarter compared to the 6.4% decline in the first.

• The Conference Board’s index of leading economic indicators has increased for six straight months. The most recent reading has put the LEI's six-month growth rate at the highest pace since 1983.

• There are early signs of improvement in the job market as well. The monthly average of initial jobless claims has fallen to 523,750 from 657,250 in April, suggesting the rate of layoffs is slowing.

• The number of temporary hires has also ticked up for three straight months, showing that employers are now looking to add to payrolls at least on a temporary basis.

• Gold has surged due a weakness in the U. S. dollar. Inflation expectations aren’t running out of control. The implied 10-year inflation rate as based on Treasury yields is a tepid 2.1%.

Subramanian says, “The more likely scenario for equities is one where prices move sideways for some time before the bull starts to charge again. Cash-laden investors can use periods of weakness to get back into high-quality stocks in incremental steps.”

Dollar-cost averaging into top mutual funds http://www.alphaprofit.com/Articles/Top-Mutual-Funds-0823... is a low-maintenance way to get back on track. Subramanian says, “There are several diversified no load mutual funds with stable management, modest expense ratios, and good performance for investors to choose from. Many of them are available on a no-transaction fee basis at brokerage firms like Fidelity Investments and Charles Schwab.”

AlphaProfit Investments offers the No Transaction Fee (NTF) Growth model portfolio that includes the best no-load mutual funds http://www.alphaprofit.com/Articles/Mutualfundexpenses012... from the domestic, foreign, and specialty categories. “A fully invested posture enabled the AlphaProfit NTF Growth model portfolio to gain 76% in the past eight months. Gains from selections like the Yacktman Fund  http://www.alphaprofit.com/NoLoadMutualFunds/Yacktman-Fun... have helped this portfolio outperform the averages.” says Subramanian.

The AlphaProfit NTF Growth model portfolio will be repositioned on November 18 to capture emerging opportunities and better weather the evolving market environment.

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AlphaProfit Investments is an independent investment research firm located in Sugar Land, Texas. The firm publishes subscription-based investment newsletters that include practical portfolios for mutual fund, exchange-traded fund, and stock investors. The Sector Investors’ Newsletter offers high-performance sector-based model portfolios. Published since 2003, the Sector Investors’ Newsletter has received Hulbert Financial’s #1 rank numerous times. The Fund Investors’ Guide offers actionable recommendations on best-of-breed no-load, no-transaction-fee domestic, foreign and specialty mutual funds. AlphaProfit also publishes a free e-letter MoneyMatters that provides insights on the economy, markets and sectors as well as ideas to invest in exchange-traded funds, mutual funds, and stocks. AlphaProfit MoneyMatters subscribers also receive complimentary access to AlphaProfit’s premium services.