Trading is all about understanding the now, seeing dimly into the future, and placing your bets accordingly. The fluidity of the moving parts that make up your present and future portfolio make success difficult, but a mastery of those three skills is the key to the kingdom of profit.
Jon Najarian, co-founder of TradeMonster.com understands the game and was born to play it. He offers his take on two key themes for 2012:
The Euro and its relationship to the dollar has been a dominant theme of 2011 to date and a situation very much still in play. Obviously. What matters is what happens next and how to exploit it for our personal financial gain (for our purposes the human toll of a collapsing EU doesn't actually matter).
Najarian expects more dollar strength vs. the Euro and doesn't see a total collapse across the pond. Specifically, he says Euro weakness doesn't matter unless or until they cost less than $1.15. He also says the dollar will stay relatively flat against other global currencies.
He's playing it by favoring multi-national service companies like IBM (IMB) over "heavy metal" exports like Caterpillar (CAT). The input cost of services is more flexible than the component prices of enormous earth movers.
Najarian makes the practical observation that there's absolutely no workable green energy solutions in our immediate future. That being the case, he's looking for the price of crude (as measured not by the WTI but rather Brent) to keep creeping higher, largely at the expense of consumers.
Natural gas, Najarian says, will be key to the country's energy portfolio and so the Keystone XL pipeline is critical to our national interests. Still, with or without the Keystone project specifically, the affable former Bear says the country is going to continue to build its own pipelines, utilize our enormous natural gas reserves and dig for coal. His outlook for Europe is much the same. Whether you like this view from an environmental point of view matters not a whit.
Najarian's amoral energy plays all benefit from America's needs for energy today, not what we hope we'll be using to fuel our cars in 2030. Specifically he likes Schlumberger (SLB) and on the hardware side Haliburton (HAL). As his number one play for 2012, coming straight outta Appalachia with an old-school coal mining business model is... Alpha Natural Resources (ANR).
That's how Dr. J sees it, what about you? Let us know in the comments, on our Facebook page or give me a tweet @Jeffmacke.