What stocks to invest in 2010?

It's a good thing the market has rebounded from its lows. The 3,000 level would prove to be a psychological resistance in the near term. The market apparently shrugged off the news of potential brownouts in the nation's capital due to positive movements in global indexes (and the possible rescue of Greece).

The market will probably have some pretty wild swings in the first - and probably second - quarter of the year as the Philippine election story starts to unfold. In an ideal world, i.e. a world sans the financial crisis, there are supposed to be stocks that should pick up in an election year. (I think we're still in a crisis, but as governments worldwide start planning their exit strategies, it's a surer sign that economies are stabilizing.)

What stocks could these be?

Well, let me first give a disclaimer. I don't have any charting software. I don't have access to brokerage reports. And, I also don't have any inside dibs in any of the stocks/companies I'll mention in a short while. I'm just basing these suggestions purely on common sense. Buyer beware please. Investments entail risk and if you make a wrong move, you can see your capital losing worth by double digits.

Continue to buy "defensive" stocks. If I understand correctly, defensive stocks are utility companies - power generation, power distribution, water distribution, telecoms and healthcare. Of those listed I am looking at AP, EDC, FGEN, MWC, MPI, and of course TEL.

The reasoning is that even if the economy stays flat, companies and individuals will continue to use the phone, take a bath or use the computer. If the economy picks up, power usage goes up, people eat out more so water usage will follow, there'll be more cellphone usage as opposed to landline. The problem for the power and water distribution sector this year? El Niño baby.

What about election plays? Well I suppose that'll be the media stocks, that is - GMA and ABS CBN. I'm pretty sure their first half revenues will shoot up due to the ad spend by the "friends of (insert politician's name)". Another possible stock that may rise could be JFC. Perhaps those running for office would distribute Chicken Joy whenever they make their campaign runs? URC / SMC / PIP could also benefit.

Pure speculation stock for 2010? VLL! I'm sure the stock will fly if Villar wins the presidency. Hehehe.

One caveat for investors is that unlike foreign exchanges, ours is quite volatile because we are at the mercy of foreign brokerages. If something pushes up their fears about our market, they dump even the above quality stocks like there's no tomorrow. Of course, if you're a investing for the long term, this is of no concern to you. In fact, these could be buying opportunities.

Also, most of the local major companies and conglomerates have tightly held shares, and the owners and the management team don't always change. This means whatever they're doing good will continue for as long as they're led by the same group of people. So, if their businesses are doing well under their management, you can more or less predict that this will still be the case in the foreseeable future.