Don’t Use These Materials to Build Your Retirement Portfolio

Alcoa, Walter Energy and Cliffs Natural Resources aren’t the best materials to be using to build your retirement portfolio.

May 25, 2014 at 1:57PM

Walter Energy Naturalresources

Photo credit: Walter Energy 

There is a case to be made for investing in material stocks like Alcoa (NYSE:AA), Walter Energy (NASDAQOTH:WLTGQ), or Cliffs Natural Resources (NYSE:CLF). All three companies have been battered by the financial crisis, but a slowly growing economy could be just what these companies need to thrive in the future. That being said, there's way too much risk involved with all three, which is why you don't want to use these material stocks as building blocks for your portfolio.

I've created the following slideshow to show both the risks and rewards of investing in these material stocks. For example, while Alcoa is benefiting from the rise of aluminum in vehicles, it is still way too exposed to the commodity price of aluminum. Meanwhile, iron ore producer Cliffs Natural Resources and coal miner Walter Energy aren't in the best financial shape, which just isn't the best building block for your retirement.

Instead of owning these material stocks like Alcoa, Cliffs Natural Resources or Walter Energy investors should stick with safer companies that aren't as exposed to commodity pricing pressure. That's why I'll detail one sector that investors should consider instead as strong contracted cash flow and visible growth potential make it a much better building block for a retirement portfolio.

This is where to invest for retirement
Record oil and natural gas production is revolutionizing the United States' energy position. It's also providing an enormous opportunity for midstream companies to thrive. However, these companies have one more secret to success. Each are using a small IRS "loophole" to help line their investors' pockets with money. That's why investing in this sector is a retirement strategy you need to learn and can do so by checking out our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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