Oil, gas and mining are good in future when oil prices bottom out, but not now. Regardless of what King Salman of Saudi Arabia does, he will most likely continue to out-compete shale oil to maintain market share for OPEC and hence, his kingdom. For this year, I shall not look at oil, gas and mining.
Banking and finance may benefit from rising interest rates (not bailouts) in future, though non-performing loans to oil and gas-related companies may be a concern, so Standard Chartered, HSBC are out for me, but maybe Aviva or Barclays look better with lesser exposure to 'bad markets'. Rationally, they are worth holding.
Telecoms are always stable. In the long run, telecoms stocks may benefit from ecological-friendly innovation, advancement in fiber Internet, particularly Google Fiber in the United States and Broadband Connection Voucher Scheme in the United Kingdom. If they partner with other organizations to create a super-connected economy, even better for them. With substantial capital investment, I expect the telecommunication companies to do even better than most of the other sectors in future, and the most innovative telecom may earn bigger monies. Similarly, engineering stocks that build the future of our economies, especially those that support telecoms' businesses, will grow faster than the average listed company.
Pharmaceuticals are subjected to patent revocation and government policies to 'lift' patents to lower healthcare costs, as seen in India. Also, alternative medicine could lead to some diversion away from chemical drugs, particularly from governmental efforts in China and South Korea. There will be no dominant pharmaceutical firm in the future. I do not favor this sector.
'Sin' stocks as a whole interest me. There will always be great demand in alcohol, tobacco, gambling and, relating to our never-ending desires for more, consumer goods. Demand for this sector is particularly fickle, but there is consolidation here. I do not think we experience the full impact of restructuring in this sector so far.
Property stocks may hurt from rising interest rates. Those that do not handle decreased market demand well, with worse cash flows, may be hurt in future. However, there are property developers who may use the window of opportunity to snap properties, hence they will grow in future. For now, though, I look at companies that deal with industrial space, and not companies that deal with commercial and especially residential spaces.
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