New Money

According to Citi's February 2009 "Small Cap Sector Snapshots," analyst Lori Calvasina thinks two sectors look compelling right now: technology and consumer discretionary (that last category includes things consumers spend on non-necessities, such as restaurants. Apparently companies like Chipotle and Buffalo Wild Wings have been somewhat successful in weathering this recession.)

Writes Calvasina in a note to clients:

Still Intrigued With Consumer Discretionary and Technology - We remain overweight these two sectors, where valuations look compelling and our economic models are continuing to climb higher. These two sectors also tend to outperform late in recessions, after broader markets have bottomed. Both have been outperforming YTD and since the November 20th, 2008 lows in equity markets.

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On Wall Street, Friday the 13th superstitions go way back. It all started when a Boston stockbroker published a book called--you guessed it, Friday the Thirteenth--about an evil broker attempts to bring down the stock market on that day, according to Time's brief history of Friday the 13th. Some traders even saw it as a sign that during 1987--the year of Black Monday--three Fridays fell on the 13th of the month.

Jason Zweig looks at the hard numbers today in his Intelligent Investor column: it turns out that on average, the stock market actually performs better on Friday the 13th.He looked at stock-market returns going back to 1885, and found that the market rose by an average of 0.02 percent a day. Since 2000, he says, the market has gone down by about the same amount, but Friday the 13th surprisingly delivered an average of 0.28 percent. Says Zweig:

In the 1990s, Friday the 13th kicked butt, generating more than five times the return of the average day in the market. Researchers used to think there was nothing in these daily variations but random noise...but now some theorists are wondering whether the fear of Friday the 13th may actually raise average returns for the day, over time. Superstitious investors, afraid of “tempting fate," might sell stocks that day, creating purchase opportunities for more informed buyers and causing the market as a whole to go up. Scholars have documented that such factors as seasonal affective disorder, the shift to Daylight Savings Time and even how sunny it is outside can all influence short-term stock returns.

The takeaway: Don't fear the market today (any more than you normally would).

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Coin enthusiasts, rejoice. Today, the U.S. Mint unveiled the first of four new pennies depicting Abraham Lincoln reelin' in the years. The coins, produced to honor the bicentennial of Lincoln's birth (and the 100th anniversary of the production of the Lincoln cent), are the first redesigned pennies to enter circulation in a half-century. They'll debut as part of Lincoln's bicenntenial celebration held near his birthplace of Hodgenville, Kentucky.

Heads will still feature the 16th resident's mug and "In God We Trust," and the flip side will highlight a stage of his life. The first release features a picture of the one-room log cabin where Lincoln was born. The other three coins will be issued in roughly three-month intervals throughout the year and will depict Lincoln's formative years in Indiana, his professional life in Illinois, and his presidency. You can see the full lineup here.

The penny, which won't buy much--if anything--these days, has long been the target of a heated debate over whether to scrap it on grounds that it costs more to produce than its worth. What's your two cents?

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Aside from Treasuries and a handful of other asset classes, not much worked for investors in 2008. Hopefully 2009 won't play out like a bad sequel. In this week's The Outlook newsletter from Standard & Poor's, equity strategist Alexander Young lays out four investing strategies he thinks have the potential to deliver positive returns in this market (they may also reduce the volatility of an overall portfolio):

1. Investment-grade corporate bonds. Young says these bonds can boost the yield on your cash investments without adding too much risk. One access point: iShares iBoxx Investment Grade Corporate Bond ETF (LQD), which pays quarterly dividends quarterly and recently yielded 5.5 percent.

2. S&P "Dividend Aristocrats." U.S. companies with a history of raising their dividend payouts have  historically delivered higher returns than their peers, Young points out.  The S&P High Yield Dividend Aristocrats index tracks the 50 highest yielding companies in the S&P 1500 Composite index that boosted their dividends every year for at least 25 consecutive years. An ETF that tracks that index is the SPDR S&P Dividend ETF (SDY) It pays dividends quarterly and recently yielded 6.1 percent.

3. The U.S. Dollar. Quality rules in a down market. Young says the dollar has benefited from the so-called “flight to quality" Treasury buying, as well as the decline in overseas economies. "We believe the global recession and credit crunch will be with us for a while. This should help maintain a 'flight to quality' bid in Treasuries, which would offer further support to the U.S. dollar, as would continued international economic deterioration, which we think is likely," he writes. An ETF in this space is the PowerShares DB U.S. Dollar Index Bullish ETF (UUP).

4. Commodities. Global economic deterioration could drive commodity prices even lower, says Young, but the long-term outlook is compelling. "Our conviction is due in part to the much larger drop in raw material prices than equities in reaction to the global recession," he writes. The iShares S&P GSCI Commodity-Indexed ETF (GSG) is one way to play this idea.

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