Looking Back, Looking Forward

Physician's Money Digest, January 2007, Volume 14, Issue 1

Alan Haft, a nationally recognized investment advisor,shares a few stocks, in no particular order, that investorsshould have owned 10 years ago. His list includes thefollowing three stocks:

•Research In Motion (ie, creators of the Blackberry,etc). Not only did this technology revolutionize the wirelessindustry, there remains huge, untapped potential forgrowth in the future in a number of areas.

•Microsoft. Haft says that one of the largest cashpositions in history makes this company a very longtermplay and a staple in any portfolio's exposure totech. "Their cash position is so deep that they can affordrisks," Haft says. "And one of the speculative attemptsthey are incubating is bound to take off, sending thestock to another level."

•Exxon. Haft notes that as far as energy is concerned,there is currently "insatiable world demand thathas virtually no end in sight. If you owned it 10 yearsago, you made a fortune. And if you own it now, why sellit?" He says the company's growth and profit potentialhas no foreseeable end in sight.

Past results, of course, are not indicative of future performance. But Nick Raich,director of research for the Private Client Group at National City, says if you want to seewhat you should have owned 10 years ago, simply examine a company's total returnfrom November 1996 through November 2006. According to Raich, the top five companiesthrough that time period are Celgene Corp, Best Buy, Yahoo, XTO Energy, andGilead Sciences. These companies are all currently listed in the S&P 500.

Going forward, Raich suggests that five companies to own over the next several yearsshould include Joy Global, BJ Services, Honda Motor,Symantec, and Peabody Energy.

Both Haft and David Twibell, president of the WealthManagement Division of Denver-based Colorado CapitalBank, are looking abroad when they eye the future. Haftsays to pay attention to China and the companies thatsupport it because they offer unprecedented growth. Hepoints out that this year Beijing's equivalent of the S&P500 is up roughly 80%. In addition, China's growthbeats US growth by a 3-to-1 margin right now, with noforeseeable end.

Along those lines, his stock recommendations includeChina Unicom, cell phone providers; HuanengPower International, an energy company; Petrochina,because of the demand for oil consumption; andFTSE/Xinhua China 25 Index Fund (FXI), one of the leadingindexes for Chinese companies, which Haft says isup 33% year to date (as of November 2006). Twibellagrees. He says that going forward, the following areasshould outperform the rest:

•Emerging market equities. Areas such as India,Eastern Europe, and Southeast Asia, in particular havegreat growth potential.

•Global health care. There will be an increased demand from aging populations inEurope and the United States.

•Water purification. Both distribution and infrastructure water purification shouldsee a huge increase in investor interest as a result of greater worldwide water demand.

•Global real estate. It will benefit both from the continued worldwide adoption ofinvestor-friendly real estate investment trust structures and rapid advances in global growth.