Bill Gunderson

By the time a portfolio gets transferred to me, I can tell where the investor is in their Cycle of Disappointment.

Step One is the investor fresh from one of the big wire houses. The kind that runs big ads on TV. These portfolios are full of well known stocks that ran out of gas years ago. Maybe they are still good companies. But good stocks? No.

I’m thinking of stocks like Cisco and Pfizer and Lilly.

Maybe there are a lot of bonds in there too. That potential client did everything right, but still the returns were all wrong. The S&P 500 is up to 28 percent year to date. With old stocks and old theories that don’t work, some of them are just barely ahead this year.

Step Two for many is the Do It Yourselfer. After seeing the guys in suits underperform the market, he figures ‘how hard could it be?’ and starts laying his own money down.

These accounts have their own look as well: I see a lot of trading for a lot of the wrong reasons. I see lots of imbalances, maybe too much money is in one stock – often an employer. Also I see a lot of people who underestimate the time and energy it takes to keep an eye on the market.

So their first visit to my office or their first phone call with me is half wealth management, half financial emotional therapy.

We talk about how markets have sectors, and how we should look for good stocks inside of hot sectors. This year, pharmaceuticals and bio-techs have been very hot.

As I checked-out a potential client’s portfolio the other day I did see a few pharma’s like Pfizer, Lilly, and Merck. But are these stocks really the pharma’s of today anymore?

Not really.

2013 has been good to the pharmaceutical sector. In fact the pharmaceutical stocks are now my third-ranked sector in the market.

Data from Best Stocks NowApp

One stock that gets high marks from my Best Stocks Now app is Valeant Pharmaceuticals (VRX).

Data from Best Stocks NowApp

Bill Gunderson

Bill Gunderson is the CEO and Chief Market Strategist of Gunderson Capital Managment in San Diego, CA. He is also a professional money manager, former research analyst, author of Best Stocks Now.