For novice investors in Philippine stocks, if you are still unsure of what specific stocks to hold for 2012, here's a good place to start -- a model portfolio of 10 stocks presented by Maybank ATR Kim Eng during its 2012 Economic Outlook and Equity Strategy talk last January 27, 2012.
It is a list made up of four power stocks, three utilities, two banks, and one consumer stock. While I don't personally subscribe to this model portfolio (I'm more aggressive), I believe this to be a solid defensive portfolio. Those who wish to ease into stock investing and do not plan to make a lot of trades in and out of stocks are better off adopting a defensive portfolio design. In terms of liquidity and solid fundamentals, these stocks are all reliable. I noticed, all of them are index stocks and most importantly, most if not all have regular dividends.
What does this mean?
With equities still facing real market risks in 2012 with the problems in PIIGS and a weak US recovery, playing a conservative stance in stocks may yet prove to be prudent. Defensive stocks with proven value usually stay strong in the face of negative market sentiment, or at the minimum are the least affected. To put it simply, if the shit hits the fan and people panic and stock prices fall, it is the stocks with proven value that stay strong. More importantly, you still earn dividends. You won't see a record year of earnings, but you will survive while others suffer.
Remember the most important rule in investing -- always protect your capital. In difficult times, survival is the name of the game.
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