Investing in a Recovering Economy

Our plan is to put more funds into equities in 2011. First, I expect the economy to continue to strengthen. Second, I expect unemployment to decline as companies increase hiring and extended unemployment benefits expire. Third, I believe government will be more centrist and business friendly. Finally, individual investors are moving back into the market.

Although we've already been trickling funds into stocks, my plan was to wait until the Dow reached 12,000 before adding significant funds. However, the Dow closing at 11,787 on Friday is close enough for us to start purchasing equities.

Up until now, I have focused mainly on dividend paying stocks which we will continue to do. In the last two weeks, we purchased shares of Merck (MRK) and Pfizer (PFE) which pay dividends of a little over 4%. For 2011, we have expanded our focus to other large cap growth stocks. Last week, we purchased share of Ford (F) and Citigroup (C) sine I expect autos and financials to benefit significantly from the continued recovery. Also, we purchased Baidu (BIDU) to get more exposure in the developing markets. Finally, we plan to buy more shares of General Electiric (GE) which I consider a high dividend stock and a financial stock.

Is it too late to get into the stock market? I don't think so. Even though the Dow is up 78% from the bottom, it is still 19.5% below the all time high, which I think may be surpassed in 2011.

Disclosure: As time of publication, we own shares of Merck, Pfizer, Ford, Citigroup, Baidu and General Electric in our trading accounts.

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This is not financial or investing advice. Please consult a professional advisor.

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