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8 Investing Picks During 2013's Volatility


Forbes lays out expectations for the beginning of 2013, plus eight investment ideas (from closed-end funds to a Chinese equity) that individuals should consider.

A lot of investors missed out on the stock market’s gains in 2012 simply because they were afraid of putting their money into the markets. In the beginning of 2013, the U.S. stock markets will likely see a lot of volatility; which makes it the ideal time for investors to get back in the game, according to Steve Forbes.

The first three months of 2013 will be rife with uncertainty, according to a Forbes online conference for individual investors. Congress still has to make a decision on spending cuts, but there’s also the need for a new budget or a continuing resolution.

According to Richard Lehman, Forbes columnist, the beginning of the year will be a battle between the president and the Republican Party, which is controlling the House of Representatives.

“Short-term outlook is very volatile and cloudy because of the budget negotiations that are going to be taking place, so we expect quite a bit of volatility,” he said.

Lehman added that Republicans view this as their last chance to regain standing with voters, and so “they will be a lot more difficult,” rather than making a lot of compromises for the sake of getting a deal done.

According to Forbes, the U.S. is about to go through a lot of changes since it looks like the economy is actually slowing again. However, this means it’s a good time to invest. Investors want to put their money in when everyone else is leaving as it creates the opportunity for you to buy shares cheap and be in a good position when things turn around

— "buy low, sell high."

“You have to be bullish on the U.S. because we’re impatient,” he said. “We do crazy things, but we also don’t tolerate underperformance for very long,” Forbes said. “We always get it right, it’s just a matter of when.”

Forbes columnist Jim Oberweis is also a fan of investing in the stock market right now. While he’s bullish on stocks, Oberweis is more bullish on foreign-listed Chinese equities than American. While China’s growth has slowed, it’s still experiencing much faster growth than most western economies. However, if individual investors are looking to invest in China, Oberweis recommends buying a basket of stocks since the market is riskier there.

“I think this is one of the best times in my life to be buying stocks relative to bonds,” he said, adding that over the next decade, investing in equities will bring better returns than normal.

Lehman and Oberweis also made specific investment picks that individual investors might want to consider in 2013.

Lehman’s picks

Cohen & Steers Quality Income Realty Fund

Symbol: RQI

Yield: 6.8%

A closed-end fund that invests in real estate investment trusts.

PowerShares CEF Income Composite

Symbol: PCEF

Yield: 7.8%

Invests in U.S.-listed closed-end funds, buying when they are selling below net asset value.

Atlantic Power

Symbol: AT

Yield: 9.2%

A power generation and infrastructure company with an unusually high yield.

Just Energy Group

Symbol: JE

Yield: 12.7%

Sell natural gas and electricity to customers under long-term, fixed and variable priced contracts. Investors must fill out and file a Form NR301 to avoid Canadian withholding tax.

Oberweis’ picks

Medidata Solutions

Symbol: MDSO

12-month return: 122%

Provides hosted software solutions for pharmaceutical, biotech and medical device companies conducting clinical trials.

Exlservice Holdings

Symbol: EXLS

Yield: 26%

Provides outsourcing services, including claims processing, financing and accounting functions.

Acacia Research

Symbol: ACTG

Yield: -36%

Develops, licenses and enforces patented technologies with a big lawsuit pending against Apple that should be settled with Acacia getting a lot of money. It goes through cycles as lawsuits are decided, sending its stock up and down, but on a steady upward projection.

21Vianet Group

Symbol: VNET

Yield: -0.2%

An American-listed Chinese company that provides managed network services to enable customers to deliver data across the Internet faster. As the U.S. experiences huge e-commerce growth, now China is on the cusp and this is a great way to play it.

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