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Security breaches at companies like Target, Sony and Home Depot have drawn much attention to the world of forensics and cyber security. And Mark Willoughby, managing director at CapWealth Advisors in Franklin, Tenn., believes that will pay off for investors in 2015.
“The attack on Sony is just the latest example of the surprising vulnerability of supposedly secure networks to hackers,” he said. “I believe companies will redouble their efforts to secure their networks/systems and will benefit companies such as Fireeye, Symantec, and Cisco.”
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As baby boomers age, that could present an opportunity for companies that offer services aimed at an older generation.
“The demographics of an aging population will benefit some companies as demand for their products and services is in greater demand,” said Mark Willoughby, managing director at CapWealth Advisors in Franklin, Tenn. “My favorites in this sector are Becton Dickinson, Johnson and Johnson, and Stericycle. I believe that these companies will benefit from this increased demand. Entry points are critical here as these companies have risen rapidly in price.”
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While many argue that diversification failed in the 2008-2009 crisis, with most asset classes moving toward positive correlations, 2015 could be different. Matthew D. Medeiros, president and CEO of The Institute for Wealth Management in Denver, believes investors will be rewarded for diversification next year.
“Over the past two years many investors have become disillusioned with diversified portfolios when comparing them to the S&P 500,” Medeiros said. “As the components of the S&P 500 become more expensive, relative to a P/E ratio, other asset classes such as alternatives and foreign markets will avail themselves as opportunities for outperformance.”
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With the price of oil and gas at historic lows, some advisors believe now’s the perfect to buy the low.
“With the U.S. on track to become more energy independent and to be one of the dominant oil production countries in the world, this should serve as a positive for the U.S. markets,” said Matthew D. Medeiros, president and CEO of The Institute for Wealth Management in Denver.
Low gas prices should also benefit consumer discretionary investments, Medeiros adds, as consumers have more discretionary income and higher confidence in the markets.
Terry J. Siman, managing director of United Capital in North Wales, Pa., looks to natural resources companies in the U.S. and outside as well. “This idea also plays well if the global economy can grow, raising fears of inflation,” he said. “The benchmark holding would be Alerian MLP but there is also another newer ETF, MLPA.”
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As the trends of an emerging consumer and a growing middle class continue in Asia, this could be a big opportunity for companies that focus on that. That’s why Kendrick W. Mattox III, partner at Edge Capital Partners in Charlotte, N.C., is betting on Asia Ex-Japan equities.
“The rise in wages supports a rebalancing of economic growth towards more stable consumption (often of regionally produced goods) and increases the earnings potential of specific sectors such as consumer goods, healthcare, technology, and some industrials,” Mattox said. “Valuations are low relative to the rest of the world and itself historically while growth remains comparatively high.”
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