Sunday, August 26, 2007

Winterize Your Stock Portfolio Early

Summer is almost over. It may not be too early to begin thinking about winter clothes, snow shovels, and rock salt. I'm not suggesting that you pull your showshoes out of storage yet. What I am suggesting is that you winterize your portfolio early. Probably over September and October, a lot of fund managers and individual investors will load up on seasonal winter market plays. Knowing this in advance may help an investor take advantage. Moving into cold weather stocks early could be risky if the winter isn't very severe. However, if you wait until CNBC and Bloomberg are talking about it, you are probably too late.

I think of it as a piece of market psychology. People may be more likely to buy stocks that reflect their general attitude. When people are cold, they think that cold weather stocks are good market plays.

Seasoned investors and even novices like me can make educated guesses about what businesses could be affected by the change in seasons. Consider thinning down the hotel and vacation stocks in your portfolio, such as for companies like Royal Caribbean or the Bluegreen Corporation. Even if a warm weather company has innovation and good strategy, they will need to work harder for their sales during the winter months. Why not find a winterized stock pick that you can get for a discount at this time of year? Then hold on for a month or two untl it goes up.

Winterized stock ideas that you may want to research further include:
Columbia - as a winter coat play.
Bayer - as a cold/flu play.
Devon Energy - Natural gas play on heating.

These are just a few of my ideas. Be sure to do your own research before investing.

-------Sincerely, Trevor Stasik

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