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Notes to myself, possibly of interest to others.
-- Bill Northlich

Wednesday, October 13, 2010

Another take on equity strategy

in the aftermath of the very soft ISM and nonfarm payroll reports for September, double-dip risks, as they pertain to the U.S. economy, have not exactly disappeared. So it would stand to reason that an equity investor would rather own sectors that have low as opposed to high correlations with the U.S. economy. The sectors with the highest correlations are industrials, financials and technology. The sectors with the lowest correlations are health care, energy and utilities.

What’s even better is that the first group has an average dividend yield of 1.2% while the latter is 3.5%.  In our work, Energy and Health Care are among two of the most undervalued equity sectors at the current time; Financials and Materials, two of the most expensive.

...Rosenberg today

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