How to profit with stocks in new bull market

Experts suggest technology, credit crunch survivors, retailers and Brazil, Russia, India and China may be good investments

There has started a new bull market last week after the FTSE 100 index. They lead shares posted with the biggest monthly gain in 6 years. Especially “recovery” stocks have delivered bigger gains.

UK equities were partly saved by the private investors, who invested £800.000.000 in February and March.

“We have become more optimistic for a recovery in early 2010 and expect risk appetite to pick up further.” Says Fredrik Nerbrand at HSBC Private Bank.

This is a rally that is most likely to hit a “brick wall” in the next few months, but there might be another 10% rise before then, so not everyone seems to be convinced.

However, the more risky type of investor will have plenty of opportunities, to gain a long-term profit, by investing in quality stocks at a low price. Here are some examples.

Tech stocks
Technology stocks are well positioned to lead markets. Everyone knows that investing in technology is the right thing to do at this moment, it doesn’t stand still.

Survivor stocks
HMV has benefited from the demise of its two biggest competitors, Woolworths and Zavvi.

Go for strong balance sheets
Most people should still be hedging their bets on firms with strong balance sheets, said Richard Plackett at Black Rocks. If you buy firms with weak balance sheets, you need the global economy to get better straight away.

Retailers
In the short term, consumers will have more money in their pockets because of lower interest rates and petrol prices. Retailers will be another beneficiary of higher consumer spending.

Emerging markets
In opposition of last years’ figures, emerging markets have shown us impressing facts on their markets. They have been developing a lot of new products.

What funds to buy
Advertisers recommend “recovery” funds such as Fidelity Special Situations.

Own opinion
It’s a very good sign that the private investing sector has supported the stock markets, by investing over 800m pound. This might be a sign of slowing down this crisis.

I think that in this article you can find a range of important tips for the private investors. I personally would invest more in emerging markets, such as India and China. There is great future coming towards them. Also I would always check if the company I invest in has performed well in the past, and if they have a strong balance sheet to show, so you don’t have to depend on the global economical situation.

Of course last but not least, technology companies seem to have a major success these times. And for good reasons. New products have been developed, which gives us more credibility on these companies, but of course only if their product become a success.

Written by Tom Baeyens
Student at Artevelde College
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Source: http://www.timesonline.co.uk/tol/money/investment/article6210631.ece