Trending Securities for 2016

Trending Securities for 2016

2016 is starting out bumpy and there are some interesting new trends that are emerging that many investors will enjoy to go along for the ride. The market always follows certain themes or short-term trends, even if they don’t exactly make rational sense. Eventually the market always corrects itself. In 2016, there are a few short-term trends to jump upon.

The first trend is shorting technology hardware companies. In 2015, companies like FitBit, GoPro and even Tesla got a lot of good press and attention. They traded with heavy volumes and had good runs. However, sales came in a bit short of expectations in 2015. In addition, people are realizing that they are not as unique as once believed. Each of these companies is now coming other pricing pressure as competitors in their categories jump in.

The same thing goes for market behemoth Apple. Now that everybody that wants an iPhone already has one, growth is becoming increasingly challenging. The Apple Watch and Apple TV are still not major revenue drivers and other products seem to be moon shots at this point. Worst of all, the major growth markets of China and the Middle East and slowing dramatically. These accounted for much of Apple’s new marginal sales and 2016 should be a tough ride.

Oil and energy companies are always an interesting play. Oil and fracking companies are now more distressed than ever before as the price dips to $30 a barrel and natural gas is just over $2.

With such distress, there are many opportunities to buy big, well-known companies cheaply such as Exxon and Chevron. Cheniere (LNG) which owns a major gas export terminal that was just granted the right to export liquefied natural gas is another distressed play that is getting a lot of interest. As long as these companies don’t go bankrupt, they are sure to rebound strongly as the price of oil returns to the $40 or $50 per barrel that analysts predict.

The last trend is to buy banks and financial institutions. As the Fed raises rates in 2016, these firms will get great margin increases. Many offer solid yields and great balance sheets. For example, Goldman Sachs offers a 6% yield on its stock even though it is the most well-known brand name with the best balance sheet in investment banking.

Overall, 2016 should be a fascinating year with many interesting new trends.

Jonah Engler is a financial expert from NYC.