Investors searching for index-beating returns will, by definition, be required to pick stocks and sectors which outperform the broader indices in question, while simultaneously skimming off under-performers in an attempt to "beat the benchmark."
In recent years, holding positions in many of the largest companies on the TSX or S&P 500 proved to be prudent investment strategies, with a greater proportion of the market capitalization of indices now captured in a handful of the largest stocks traded on these exchanges.
As we head into 2018, however, many experts are warning investors to be much more selective in their stock-picking approach, paying closer attention to fundamentals and potential growth catalysts as we approach a stock market which is close to being perfectly priced.
Sectors such as commodities have hit lows not seen in decades recently, and as such, this is a sector I will be keeping my eye on this year.
The commodities sector is sufficiently broad, and although many consider commodities to consist only of oil and gas, two important commodities but perhaps not the best commodity to consider right now, I would encourage investors to look for opportunities elsewhere within the spectrum of commodities.
For investors interested in oil & gas exposure, however, I would recommend staying away from any company with significant interests in the Canadian oil sands, as I see this sector continuing to be hit hard over the long-term due to various macroeconomic drivers.
Invest wisely, my friends.
