4 Wall Street Resolutions for 2009

I'm working on a list of resolutions for 2009, but they have nothing to do with joining a gym or doing more volunteer work around town.

Sure, I could certainly stand to shed a few pounds or be a little more charitable next year. Then again, the market losses of 2008 have provided quite the workout, and more has been taken from my portfolio than I could reasonably give away.

So my list of New Year's resolutions revolves around stock market moves. If I'm right, I'll get plenty of exercise as I jump for joy. And my advice, in retrospect, will seem so charitable.

Let's dive in!

1. Buy the biggest losers of 2008, early in 2009
A brutal 2008 isn't ending well for some of the market's biggest bleeders, and understandably so. Investors have been selling dogs this month, turning paper losses into taxable advantages. Tax-loss selling is real, it's tactical, and it can be your friend if you play it right.

Take a look at some of this year's more prolific trading victims:

 

12/31/07

12/26/08

Loss

Sirius XM Radio (Nasdaq: SIRI  )

$3.03

$0.1269

(96%)

Las Vegas Sands (NYSE: LVS  )

$103.05

$6.05

(94%)

Suntech Power (NYSE: STP  )

$82.32

$10.29

(88%)

These stocks have definitely taken their lumps, with many of them earned. Sirius is tackling debt refinancing demons. Las Vegas Sands is scaling back in the once-booming Macau market. Suntech is getting slammed along with so many other solar energy plays.

I get it -- but premium radio, casino gaming, and solar power are also no-brainer growth industries when the market comes around. As long as you put in the due diligence to separate the duds from the studs, now is the time to buy into the year-end selling.

2. Buy the darling tech stocks after their quarterly earnings come out
I love bellwethers like Google (Nasdaq: GOOG  ) and Apple (Nasdaq: AAPL  ) , but I'm hesitant to jump in over the next few weeks. I think both of these companies will deliver uninspiring financial results during the current quarter. The warning signs are everywhere. New York Times (NYSE: NYT  ) posted a 4% decline in online advertising revenue for the month of November. Netbooks appear to be seriously outselling MacBooks as holiday gifts this season.

Sure, Google will hold up considerably better than the ad-dependent new-media arm of old-school periodicals. Apple is also moving a ton of 3G iPhones. However, I would rather sit out the next few weeks, figuring that the stocks will take a tumble after they deliver their quarterly results.

I don’t promise that I'm right. Maybe Apple and Google will blow the market away like they typically do. Even if the quarters are uninspiring, maybe the stocks will run up over the next few weeks, more than offsetting a conference-call letdown. I'm just not willing to take that chance.

3. Avoid the temptation to buy into sectors that won't bounce back
I have no problem buying into this year's biggest losers, but I'm sidestepping damaged sectors. You won't see me snapping up real estate developers, even if traders recently began nibbling at the ruins. Where are the catalysts for a recovery in prices for new developments when there are plenty of vacant properties sitting unsold?

There will certainly come a time to buy back into financial services, homebuilders, and automakers, but there is little reason to believe that the fundamentals will justify that action in the year ahead.

4. Follow the earnings
Analysts are hosing down profit projections on most -- but certainly not all -- companies these days. I've been tracking companies where Wall Street is actually revising earnings estimates higher, and I suggest you do the same in seeking out winners for 2009.

Trust me, they exist. Over the past three months, analysts have gone from expecting unmanned aircraft specialist AeroVironment (Nasdaq: AVAV  ) to earn $1.16 a share this fiscal year, and $1.38 per share in the next, to predicting earnings of $1.25 and $1.42, respectively.

Earnings ultimately dictate share prices, so you may as well buy into the handful of companies that are gaining ground as the headwinds blow.

Good riddance, 2008
Don't get down about the year that was when you can get pumped about the year that will be. 2009 will bring plenty of challenges. We're certainly not out of the woods yet. However, the new year also brings new opportunities.

It always does.

Now I'm off to see about that gym membership.

Other stories to read before the ball drops:

Suntech Power Holdings, Google, and AeroVironment are Motley Fool Rule Breakers picks. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't mind taking out the crystal ball from time to time, if only to dust it for fingerprints. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (34)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 29, 2008, at 1:32 PM, DemianBohemian wrote:

    "Sirius is tackling debt refinancing demons"

    Are you a believer in the supernatural Rick? If you don't now, maybe you did back when The Motley Fool was recommending XM as a stand alone company @ over $30 a share. It's obvious that you are not worried about what might happen to you in the afterlife for bashing the combined company down in the pennies all this time now...

  • Report this Comment On December 29, 2008, at 4:32 PM, TMFBreakerRick wrote:

    Welcome back, DB. I'm not about to ask why you see this as a bash piece, but I appreciate the history lesson. Rule Breakers did take about a 50% hit on the XM recommendation three years ago. Since it recommended selling XM more than two years ago, shorting XM (and exchanging it into Sirius at the appropriate ratio) would have resulted in a gain of 80%-90%.

  • Report this Comment On December 29, 2008, at 5:12 PM, mberan wrote:

    Here we go with Sirius again. A $3 stock that's now down to 12 cents. I thought the Fool didn't hack penny stocks. Next we'll be hearing about how Starbucks is another great buy! Please, instead of hacking the same old tired stocks find something that might actually work.

  • Report this Comment On December 29, 2008, at 5:46 PM, Redbird95 wrote:

    Really Sirius?? Do you know something the Street doesn't, such as how they will handle all that debt. The best play to own Sirius stock at this time is probably to be a bond or other debt holder. Yea, you might be able to make a quick 50 or 100% if it goes to $0.30 before they liquidate the common stock holders in a bankruptcy but then all penny stocks are crap shoots like that.

    A better resolution would be to take a long, long look at debt levels and due dates before buying any stock or sticking to companies like Microsoft, Apple, Cisco that don't have any real debt. 2009 is going to be the year when a lot of debt holders become stockholders.

  • Report this Comment On December 29, 2008, at 6:09 PM, specktest101 wrote:

    I will agree wholeheartedly with one of the last lines in the article:

    "Good Riddance, 2008". At least as far as sussing out the market goes...

  • Report this Comment On December 30, 2008, at 5:13 AM, Fredlee009 wrote:

    Good ridance to 2008? Why? 2009 is when it gets ugly, and will be a lot worse than 08...DOW 5500 is a very very real possibility....As for Sirius....That stock will recover at some point, its inevitable and obvious....Bashing a .12 cent stock is like when your in 8th grade, and you pick a fight with the sickly 5th grader cause your weak minded and lack self confidence...Guess what Rick must be....

  • Report this Comment On December 30, 2008, at 5:15 AM, Fredlee009 wrote:

    Every time an article warns me about Sirius, or a poster tells me they are going bankrupt, I just want to buy more shares, as the obvious contrarian view....only way to make money in the market is to do the least expected.....Like who would have guessed after Freddie MAC bottomed it would gain over 300 percent back the other direction....Someone knew, I guarantee you that....

  • Report this Comment On January 03, 2009, at 11:37 AM, snakeflake wrote:

    Finally, a piece i can relate to. BUY!

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