Strategist’s at Bank of America Merrill Lynch recently released their top 5 trades for 2011 and it looks like they’re riding the commodity/emerging market train in a big way:
- Emerging markets and commodities remain strong but volatile. The broadening out of the BRIC countries’ performance is likely to continue, in our view. We favor LATAM EM over Asia EM. Favored sectors leveraged to the commodity trade are Materials, Industrials, and Energy.
- Gold remains in a secular bull market with projected resistances at $1500-1600 and then in the $2000-2300 area. We have raised our long-term targets to $2000-3000. Major support is $1265 to $1160.
- We expect Silver or “poor man’s gold” to remain strong. First resistance is $31-32 and second resistance $37-41. Longer term we expect silver to test its 1980 high of $50. Major support is $21.50 to $19.50.
- We favor growth over value. Consumer Discretionary and Information Technology are leadership sectors that are more heavily weighted in growth.
- For yield within the equity market we remain focused on Master Limited Partnerships (MLPs), Pharmaceuticals, Real Estate Investment Trusts (REITs), Telecom, and Tobacco.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.